There are plenty of mortgage scam artist out there who are eager to take your money and leave you with a lots of empty promises. Here are some of the things you need to know to help yourself in your quest to lower your monthly mortgage payments.
If you are one of the many home owners who are struggling to make a mortgage payment, a Loan Modification may save your home. It is basically a restructuring of the terms of your existing loan. The interest rate, the length of your loan, and other elements could be adjusted to make it easier for you to make your monthly payments.
In the past, some loan modifications were totally inadequate. Often they only provided temporary relief. Home owners soon found themselves in the same intolerable situation. This is why the White House administration created the Making Home Affordable Program (MHAP) which has been extended until December 31, 2013.
Should you attempt this process by yourself or should you seek professional assistance? The top 10 tips listed below will help you answer this questions and should ease your concerns and keep your home from foreclosure.
While you won’t get a definite yes or no, the Government’s website Making Home Affordable has a Payment Reduction Estimator that will help determine what your current mortgage debt-to-income is and how much your monthly payment could be reduced if you qualify for a modification.
Going it alone requires that you have the time, skills and experience necessary to battle your lender. Few private citizens have had any previous experience with negotiating the terms of a loan.
There are HUD approved counseling agencies who have plenty of experience with loan modifications who do not charge for their services. Make sure you don’t pay any up-front fees or give confidential information to any company that is not a law firm. These should be heeded warning signs that you may be scammed by a loan modification company.
Obtaining the services of an Attorney, who is well versed in the many issues of loan modifications and can get you the best terms, is money well spent. Nominal Attorney fees expended during the negotiations can be recouped many times over during the life of your loan.
While participation by lenders in the MHAP is voluntary, the Federal Government is providing financial incentives if they participate. Many of the major lenders are participating in the program.
Before contacting your lender, you should gather the following information:
- Monthly Mortgage statement
- Information about any other mortgages on your home, if applicable
- The two most recent pay stubs for all household members who contribute to the mortgage payment(s)
- The last two years of tax returns
- If self-employed, the most recent quarterly or year-to-date profit and loss statement
- Documentation of other income you may receive such as alimony, child support, social security etc.)
- The two most recent bank statements (savings, checking etc.)
- A utility bill showing homeowner name and property address
- Unemployment insurance letter, if applicable
- Account balances and minimum payments due on all of your credit cards
- Information on all your other assets
- It could be very helpful to prepare a letter describing any circumstances that caused your income to be reduced or expenses to increase (job loss, reduction in hours or rate of pay, divorce, illness, etc.)
Foreclosure is very expensive for lenders, which gives you a bit of an edge when negotiating a loan modification. Just make sure you or your attorney provides justifiable data on why the deal won’t work.
Remember: If you think you’re getting the runaround don’t hesitate to “CC” your senator or congressman on the correspondence. Your representatives will probably not intervene for you, but it still could affect how your lender deals with you in the future. This should not be considered as an initial procedure but as a tactic that you can use if you are getting resistance from your lender.