subject: Best way to present your financial information to your lender for loan modification assistance [print this page] You are sitting at home and starring at a lender application form for your loan modification.
You ask yourself "should I disclose little Jimmy's income?" Little Jimmy who lives in your basement and pays cash for rent.
Here is short list to help you sort through it all.
1) First thing you need to do is sit down and on a piece of paper or computer go over your monthly expenses. List what goes out every month and what comes in for income.
2) Add everything together and see where you are everything month. Are you negative a few dollars, a few hundreds dollars, or maybe thousand and more...
Maybe you're not even negative maybe you are positive every month...
Tip1:Lenders want to see you can at least afford your current mortgage payment. If you are seriously over extended and are carrying to much monthly debt, you may need to reevaluate your financial priorities.
Once you have the bottom line figured out this is what you need to know:
Tip 2: Not only do lenders want to see that you can afford your current mortgage payment, they also do not want to see you to much in the red (negative) or too much in the positive (green).
Example: Susie brings home gross income of $2300.00 a month, her monthly expenses total including mortgage payment is $2440.00. She is negative $140.00 each month meaning she is spending more than bringing in.
This can pose a problem because even though Susie is only $140.00 in the red, what is the likely hood of her keeping her payments on time. There is no cushion for unexpected expenses... However, if you are the too positive $400.00 and above (this also depends on lender guidelines), the underwriter might just say you can afford your current mortgage payment and not offer you a loan modification assistance.
Unfortunately, it is a formula that is not always known and even though the government program guideline is 31% of total gross income excluding other expenses, this isn't really the case. Reason being if you are denied for the government program and you are negative $500.00 a month you will NOT qualify for any other assistance. So the key here is to be positive around $200.00 -$300.00 a month. This is a safe number because it show's a tiny cushion but not too big of a number where you may get disqualified.
I have only found ONE website that actually has an automated software program for FREE that does this for you. Yes, I said FREE folks!! www.freeHAMPreport.com.
Check it out!!
Best way to present your financial information to your lender for loan modification assistance
By: Professor Loan Mod
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