Almost everyone with a financial hardship qualifies for one of the many available home rescue plans available, and it is something that you can do yourself, but like a lot of folks, I’m sure you are asking yourself, “Where do I begin?

It is important to know that a major factor in receiving a satisfactory loan modification is your ability to be organized and extremely persistent. Banks are currently back logged with loan modifications because of the current market conditions. By being prepared and organized, you take weeks, maybe months off the normal processing time.

Home loan modification, also known as loan restructuring, is the process by which your lender changes the terms of your home loan.  Modifications usually involve one or more of the following changes:

·         Reducing the interest rate

·         Changing the interest rate to a fixed rate

·         Reducing the principal balance of the loan

·         Other benefits, such as, forgiveness of past due debt, late fees and penalties, as well as adding past due balances to the end of the loan, and forbearance. (Deferment of payment until a later date.

Without a true financial hardship, most loan modifications will be denied.  A document that almost all lenders will require is a hardship letter.  A hardship letter is the borrower’s chance to tell his/her side of the story, and support his/her case, and should be written sincerely, and to the point.  The following are some of the financial hardships that most lenders will accept:

·         Reduced income     

·         Adjustable rate mortgage – (payment shock)

·         Loss of job

·         Failed business

·         Job relocation

·         Divorce

·         Marital Separation

·         Death of Spouse or Co-Borrower

·         Illness/Medical bills

The three terms of your loan that you should focus on when creating your proposal are:

·         The principal balance

·         Interest rate

·         Loan amortization period. 

Typically, the principal balance is the hardest of the three to have modified, but it is the one that will get you a loan that matches the market.  It is not fair or ideal to owe more on a home that what it is actually worth.

 In order to present a good case for principal reduction, be prepared to present ample and solid evidence of what your home is actually worth in today’s market.  

Automated Valuation Model (AVM), which is an online service that provides a “general” idea of what your house is worth.  This is not a solid valuation, and if it comes up too high, it may disqualify you from the principal reduction modification.  The AVM gathers everything that sold within a 1 to 5 mile radius (depending on the AVM used), without regards to size, age, design appeal, and other important factors that are used when determining the market value of a home.  These AVM services are not regulated.  You want to make sure that when a decision to modify your loan from the lender is going to be made, that they have the facts in front of them.  An appraisal done by a Certified Real Estate Appraiser is a certified appraisal of your property, and holds the strongest weight when presenting your case for principal reduction, and other considerations. 

Order an appraisal of your property today, to determine current market value. You will have solid information with which to present your case.

For a limited time, order and appraisal, and receive a loan modification kit, FREE with complete instructions and forms along with tips and formulas to complete the forms in order to submit your modification request.  Learn how the banks handle these modifications, and how to submit your package for a better chance at an approval.  Mention the code FLMP with your order to receive your FREE kit.