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2011-11-18 22:24:57

Loan Modification Calculation

There has been lots of media coverage on the topic of loan modification due to the amount of homeowners facing foreclosure and financial hardship. You can attempt to get a loan modification on your own by dealing directly with your lender or you can hire an expert loan modification company to assist you. The government is also now pressuring banks to help homeowners modify their loans but not everyone qualifies for the government's program or knows how to get qualified. To see if you quality you need to do some basis calculations to see if your income and expenses fit the criteria, in order to get a reduced mortgage payment. If you do qualify for a loan modification, then this is the best way to turn your financial situation around. Monthly mortgage payment are being reduced anywhere from 10%-40% and principal is also being forgiven off the loan balance.

The government program is called the Making Home Affordable Program and it was started by President Obama's administration. This program was designed to help millions of Americans, to stay in their homes and avoid foreclosure. During the time that the sub prime loans were given out, which was roughly during 2002- 2006, many borrowers were given loans that they should have never qualified for. Borrowers were being approved for mortgages at 100% financing, as well as not having the income to support the amount of the loan. The greed that took place in the mortgage industry during that time has led to millions of defaults on mortgage payments. In order to get qualified for this program the bank is going to look at the following calculation:

Is your mortgage payment over 31% of your gross monthly income? Your gross monthly income is what you make before taxes are taken out. To figure this out:

gross income x.31 = mortgage payment

This is the basic calculation and there is more that goes into qualifying then just having a mortgage payment that is over.31% of your gross monthly income. They will also take into consideration any late payments that you have and add them to the end of the loan. If you arrears make your loan amount go high enough where your income does not support it, then you can be denied. The bank is also going to take into consideration your other income and expenses, as well as your financial hardship. You must have a legitimate financial hardship that you will explain in a detailed letter when submitting your claim to your lender.

If you want to find out if you qualify for president Obama's Making Home Affordable Program, then click on the link and fill out the form. You will be contacted shortly after the form is submitted.


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