Preparing To Negotiate The Loan Modification

Is it wise for the homeowner to attempt to negotiate with the lender to modify their loan? That is a decision only you as the homeowner can make...

I have seen numerous cases where the homeowner attempted to modify the loan without retaining the services of an attorney or a professional loan modification company. Sometimes they are successful, but more often than not they run into obstacles that may prevent them from successfully completing thje process. Loan modification professionals understand the pitfalls and how to navigate through the mine fields of the process.

Here are a few simple steps that you can take to prepare the needed documentation for the loan modification process.

1.] Make sure that you know the state of your finances. Determine how much income you are bringing in each month. Calculate how much your monthly bills amount to. Evaluate where you can cut costs. This is where retaining the services of a qualified loan modification professional can make an immediate impact even before you submit to the lender. The loan modification professional will be able to recognize if your "Debt To Income" (DTI) ratio is out of balance with respect to the guidelines and criteria lenders will follow. If the DTI is too high, the loan modification professional can manipulate the numbers in the appropriate fashion. If this does not achieve the desired effect, they can help you with debt reduction or consolidation, so that your loan can be successfully modified.

2.] Once you have established your income and expenses, decide what payment you can afford that is reasonable. If you have retained the services of a professional modifier, they will assist you by putting together the professional financial package. Their assistance is key when negotiating with the lender to insure that you get the best possible ending result. This may require offers and counter-offers.

3.] You need to decide how you are going to pay off the loan. This is a question the lender will put forth, so you need to have a clear understanding how this will work.

4.] If you think your financial strain is very short term, you can request a forebearance which is where you do not make any payments for typically, 3 months. Banks allow this to help their customers get back on their feet from a temporary setback. Understand that the lender will attach the payments to the end of the loan. With the current opportunities that the Obama administraton has developed and the plan put into play in March 2009, it makes sense to go forward with a loan modification plan.

5.] If you haved an adjustable rate mortgage (ARM) that reset and you cannot meet the higher monthly payments, you should attempt to modify your loan. You should have some cushion in your income to show that you can handle a fixed payment, even if you have to get a second job. This will give you a better chance of successfully modifying your loan.

6.] Make copies of everything you submit to your lender. Keep all correspondance. Stay in touch with your loan modification professional so that you are up to date on the latest results.

Preparing your documents, retaining the services of a loan modification professional, retaining copies of all correspondance between the lender and yourself, being proactive and assertive...these will Empower you...they will help insure you make good choices, not emotional ones...Empower Yourself to Success!