In order to get a home loan modification, consumers must be facing a hardship that qualifies for mortgage restructuring. The homeowner must also be able to show the bank that he will be able to repay the new outstanding balance without any difficulty to even be considered for a mortgage modification. This is normally verified by the lending institution through a credit check, a salary review, a valuation of the property, and a financial analysis of outstanding debt. If each criterion is met, then the home loan modification process can begin.
The primary consideration for a home loan modification is some type of hardship: a loss of income, a recent disability, a serious illness, or a death in the immediate family. Military workers can also claim a hardship if they are stationed overseas. Those who have struggled from the onset of a loan may not qualify as a hardship case simply because mortgage rates have increased. In short, the bank has to see that a definitive factor has caused the borrower to fall behind on payments.
Having the ability to repay the restructured loan is also a crucial factor; lending institutions will not even consider a home loan modification if it is not a permanent solution. Homeowners must be able to qualify for a mortgage under the new terms of the agreement, and things like excessive credit card debt could be a disqualifying liability. A credit check and an income evaluation are normally performed before the actual modification paperwork is submitted to ensure that the related expenses are feasible to the homeowner.
It is also important for consumers to realize that a home loan modification is completed through the bank that holds the existing property loan. There is absolutely no reason to use a third-party service in order to expedite the entire process. Home modification loans are guaranteed in many areas by the government, and the paperwork is usually not difficult. If a consumer qualifies for a home loan modification, then the lender is normally eager to complete the process in order to avoid bankruptcy or foreclosure. In fact, many lenders even have special incentives for those who are current on their loans and seeking a restructuring agreement.
One of the last steps during a home loan modification is reaching actual terms that would be of benefit to both the bank and the consumer. Past-due payments are normally included within the contract by the lender, and some loans can also consolidate other types of debt as well. After terms are agreed upon, a no-fee closing normally takes place a few weeks later.