What is it?
Mortgage loan modification is the process of reworking new terms to your home loan. Lenders will decide on the most suitable modification to your circumstances. You can work out issues with your lender and come up with the best plan to make paying your mortgage more manageable.
One form of a mortgage modification is the federal government’s Making Home Affordable Plan, which is in effect now until December 31, 2012. There is more than $70 billion allocation for this program to help more homeowners save their properties.
One of the requirements for qualifying for this modification program is to have monthly payments that equal 31% of the monthly income. Another is being the primary occupant of the house whose loan is being modified. As an applicant, you must also have had the loan before 2009 insured by either Freddie Mac or Fannie Mae.
What are the benefits?
The main benefit is getting lower monthly payments. This is a huge relief, especially if money is hard to come by. There are many expenses in running a household, paying bills, sending children to school, and other necessities in daily life that having a lower mortgage helps big time. It is certainly a big burden taken off from your shoulder. Moreover, loan modification can give monetary incentives (if you pay on time and do not miss any payments) for as much as $5000 to help you with your mortgage obligations, and a longer payment term to make your payments even easier to meet.
How can you qualify?
There is a submission checklist that you can review for all the needed documents to submit together with the mortgage loan modification application form. Some of these are Hardship Letter and Financial Statements.