Key Factors for a Loan Modification

If you have a home loan and you want to evade foreclosure but you find you are in a situation where you cannot pay for the high mortgage payments you might qualify for a loan modification. This is one of many solutions you might consider talking to your lender about. A loan modification is offered by banks when home owner's have a difficult time paying their mortgage payments. This type of modification is a positive for the bank because they will not be stuck with a house and no money and for the home owner so they can remain in their home.

A bank will want to know the nature of the hardship that is causing you the incapability to pay your mortgage payments. This hardship might be a divorce, a death, job loss, and more. If you qualified to purchase your home with two incomes and you are about to get a divorce the bank may feel you cannot afford the home anymore with just your income. In a case like this you might not qualify for a loan modification.

The bank will want proof you do have the capability to pay for the home loan. You will need to show the bank your capabilities financially and your income. If you can prove to the bank you can afford the payments or a modified payment they may agree to work with you. The bank will also consider the amount of money to be paid on the loan. If you have equity in the home your chances are better for the bank to work with you. If you have purchased the home in less than two years the bank may be tougher on you with your situation.

The leading factor is that the bank is going to consider what situation is better for the them. After reviewing all of your information and the proof you can pay the bills they will make a decision if they will give you a Loan Modification or if you will be forced to foreclose. Whichever decision is better for the lender will be the ultimate decision. If you are in an area where there homes are selling and the home is in good shape, in a good location, and will for sure sell, you might be out of luck. But if you are in an area where there foreclosures everywhere and no one is buying the decision most likely will be in your favor.

A bank is going to consider many things if you talk to them about a loan modification. You should talk to your lender about this if you are in danger of foreclosing on your home due to extenuating circumstances.