3 Ways to Prevent Foreclosure Now Using a Loan Modification

Your lender does not want to own your home as much as you don't want to hand it over to them in a foreclosure. Using a Loan Modification program is one of the best ways to not only prevent the foreclosure but also a way to a better overall term and lower payments on your mortgage.

Make Contact

You must immediately contact your lender to initiate the Loan Modification process. You will want to talk to their loss mitigation or loan modification department. Inform them that you have a financial hardship and would like to request that they modify the terms of your loan. They will send you the modification package which will outline what you need to provide them to start the process. It is critical that you know how to prepare the documents they request in order for them to approve the Loan Modification and ultimately prevent foreclosure on the home.

Our book goes into the exact detail of not only what the banks wants to see but provide you with the formulas and worksheets to figure it out. You can buy it now here: Loan Modification eBook

Show your lender what payment you can afford

Lenders will modify the terms of your loan in order to lower your payments but they use a mortgage to income ratio, sometime referred to as a debt to income ratio. This mortgage to income ratio is usually 31%. If you simply take your gross income and multiply it times 31% you have what they want they would like to see as a maximum payment. In order to provide this to you they will generally lower your rate, lengthen your term, and recently they have even been reducing the amount of your principal. You should run your own calculations to see for instance what reducing your rate by 2% or 4% will do to your payment to see if that fits in the 31% they want to see. You can also calculate your payment based on a combination of lower principal and lower rate and then request they provide you both to get you down to 31%. The bottom line is you should know how to calculate your debt to income ratios because you will need to make sure they have done it correctly when they review your documentation.

To use our Free Mortgage Calculator go here: Mortgage Calculator

Stay on top of the process to prevent foreclosure

Each state has a different process to foreclose on a home, which is going to affect how you can prevent it. We provide you with a link for each of state's foreclosure laws below so review that, which will help preventing foreclosure. Call your bank weekly to follow up on paperwork you have sent them and ask if your home has entered any stage of foreclosure (based on your states laws). If the bank has ask them if it can be stopped or delayed while you are in the loan modification process. Do not let them home go to auction and insist that it be put on hold until you are given a fair consideration for a loan modification.

For a state by state foreclosure law breakdown click here: Foreclosure Law by State

If you need a step by step guide on how to get your loan modification done right to help prevent foreclosure the buy and download our book now: Loan Modification eBook