It’s easy to understand how a home loan modification plan works, and even easier to see how it can help you. But home loan modification process is a different matter. It can be long and complicated, and if you’re not prepared, you can easily make costly mistakes. Each lender has its own way of going about the home loan modification plan, but even a working knowledge of the process can help you get better results. Here’s a simple step-by-step guide to help you out.
Find an agent. You may think it’s a waste of time paying a third party to help you out, but a good agent does more than make the calls. They also help you prepare for the home loan modification process and find useful strategies for negotiating with your lender.
Do the math. Knowing your numbers is vital to making your home loan modification plan. Get the forms you need ahead of time and gather the required financial documents. This will give you a clearer idea of your situation and help you set more realistic goals.
Some of the documents you’ll need are:
- Tax returns and W-2 forms
- Paycheck stubs or other proof of income
- Bank statements
- Mortgage bills
- Property tax statements
Complete your financial worksheet. Most banks will have you fill out a worksheet detailing your monthly income and expenses. Little errors can delay the home loan modification process, so make sure your figures are as accurate as possible.
Write a hardship letter. This letter will explain to your bank why you fell into default and how the home loan modification plan can help. Make sure your reasons are accurate and valid, and have supporting documents on hand in case your lender asks for them.
Submit your application kit. Gather all your documents together and submit them to your lender, or have your agent do so. Make sure everything you need is in there—even one missing document can add weeks to the home loan modification process. Go over everything with your agent or attorney before filing your application.
The home loan modification process typically lasts 30 to 45 days, although delays can bring the wait time up to 90. Some banks are known to lose track of applications, and it’s your job to make sure your home loan modification plan is moving. Stay in touch with your lender and keep track of every conversation to avoid unnecessary delays.