Loan Modification Process - Step By Step

You have come to the right place in order to find out how the loan modification process works so that you can save your home from foreclosure.

I understand that you must be worried because your having trouble paying your home loan for your mortgage. Now you want a home loan modification so that you can continue to make payments, knowing the process of modification is very important to understand.

Before we start and to make sure everyone is on the same page, let's explain what a mortgage loan modification is.

A loan modification is an agreement between the lender and the homeowner to change the terms of the loan because the borrower has experienced some kind of hardship which has made it difficult for the homeowner to continue to make payments.

First step in the Loan Modification Process is eligibility.

Do you qualify for a loan modification. In order to qualify you need to show that you have experienced a financial hardship, and that it has made it difficult for you to pay your loan.

The following hardships are what most lenders accept as loan modification requirements.

1. job loss or relocation
2. decrease in income from wage reduction
3. separation or divorce
4. too much overall debt
5. interest rate increase on an adjustable rate mortgage
6. reduction of income/ increase in medical expenses due to sickness or injury
7. military duty
8. maternity leave
9. death in the family
10. failed business, slowdown in the economy
11. imprisonment
12. theft
13. property damage

Once you determine the hardship you have experienced the next step is to collect important documents, these include.

1. mortgage document and note
2. mortgage statement
3. income and expense report
4. federal income tax returns for last 2 years
5. w2 forms, past 2 years
6. loan modification hardship letter
7. proof of hardship
8. home valuation
9. income verification
10. home listing agreement if its for sale

After you have gathered all the essential documents for your loan modification the next step is the application process. An easy way to apply is online at a secure loan modification companies website. Your lender will usually provide an application packet and a checklist of the items you need.

Organize all your paperwork in the order they appear on your checklist, this will help the process run smoother. Overall loan modification processing takes 30 to 90 days.

During this process you will be interviewed by your lender so the lender can obtain more details from you and you can make your case for a home loan modification in person.

Next the lender will make their initial offer to you for the modification of your loan, you can either accept the loan modification agreement or you can negotiate a better deal.

In the end the loan modification process is about coming up with a win-win situation so that you can continue to live in your home and the lender is able to continue receiving mortgage loan payments

I hope this explanation helps you have a good idea of what to expect once you begin the process of modifying your loan.