Does My Current Income Play A Part In My Mortgage Loan Modification?

The loan modifications under the Obama administration’s Making Home Affordable plan, and all other loan modifications are being done for two reasons. First, the lenders do not want foreclosures that lead to them being stuck with properties that most likely have negative equity. Secondly, on the federal level, the government wants to stabilize the home market by shrinking the rate of foreclosures.You should contact a loan modification attorney to find out what steps you should take to file a mortgage loan modification.

That said, there are still requirements in order to qualify for a loan modification plan. One such requirement is to prove your current income. While lenders want to help you out of your current financial hardship, it does not do any good if they don’t properly evaluate your ability to afford the mortgage payments under the loan modification. A real estate attorney will let you know if you can afford payments under the loan modification.

You may be denied approval if your current income and expenses exceed the requirements on the new mortgage that you are applying for. The lender needs to be sure that you can cover your monthly payments as well as other unavoidable expenses.

So what do you need to prove your financial viability? A mortgage loan modification attorney can help. First, you will need to collect and organize all of the required financial documents before submitting your loan modification application. You will likely need to present bank statements, proof of income (check stubs) and expenses. You will also need to document your debt. You can do so by including recent credit card statements and documentation of any other major expenses.

What if you have to use stated-income route for proving your income? Stated income loans were originally put in place for the self-employed who have 1099 income. However, with loose lending standards and lenders looking to maximize profits, people took advantage of the stated-income opportunity by grossly exaggerating their actual financial income.

But, if you are a legitimately self-employed person who needs to prove their income, you can still do so. However, lenders have changed their stated income loan requirements. They are generally offering atricter terms and examining applicants more closely than during the early 2000s housing boom.

Most lenders now want full documentation loans and borrowers to qualify by using traditional debt to income ratio calculations. However, each lender is different and some may be more apt to accept stated income than others.

Freddie Mac borrowers don’t need to verify their income or assets. But they do need a minimum 620 middle credit score to qualify for the Obama administration’s Home Affordable Modification plan. Under Fannie Mae, borrowers do not have minimum credit score requirement.

Whichever route you choose, once the lender receives your financial material, they can begin the process of evaluating your eligibility for whatever mortgage loan modification best suits your needs.