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Mortgage Loan Modification Requirements

If you’re a homeowner who is experiencing a financial hardship, it can be a challenge to stay current on your mortgage loan. With a mortgage loan modification, your lender can adjust the original terms of your home loan in order to make the mortgage payments easier or more affordable. There are, however, certain requirements that homeowners must meet in order to qualify for a mortgage loan modification.

What is a Mortgage Loan Modification?

With a mortgage loan modification, the lender can change the loan in a few different ways. The lender can lower the mortgage interest rate, lower monthly payments, extend the repayment term, or even reduce the outstanding principal balance. The goal is to make the mortgage more affordable for the homeowner to manage.

What are the Mortgage Loan Modification Requirements?

While lenders have different steps in their loan modification process, those steps typically involve 1) determining eligibility for a mortgage loan modification and 2) applying for a mortgage loan modification.

A homeowner may be eligible for a mortgage loan modification if they can prove to their lender that their financial situation has changed and that they’re facing a significant hardship. The lender will want to discuss the financial difficulties in some detail and will likely ask for documentation of the hardship. Other common mortgage loan modification requirements include:

  • The homeowner is either 30+ days past due on their mortgage payment or will likely miss a payment very soon
  • The homeowner has a sudden decrease in income, due to severe illness or disability
  • The homeowner has a sudden increase in house costs (ex: natural disaster, uninsured loss of property, sharp increase in property taxes or HOA fees)
  • The mortgage has been in place at least 12 months and has not been modified more than twice
  • The homeowner is not in another foreclosure prevention program

To apply for a mortgage loan modification, the homeowner will first have to gather information on their income and expenses. This can include pay stubs, credit reports, bank statements, tax returns, and/or property tax and assessments. Next, the homeowner will need to contact their lender and have an open, honest, and thorough conversation about their financial difficulties. The lender will discuss the different options for a mortgage loan modification. Third, the homeowner will likely have to apply for the mortgage loan modification, which involves filling out the lender’s paperwork and submitting documentation. If approved, the homeowner will typically make an immediate payment on the modified loan.

Have Additional Questions? Contact Burrow & Associates

A mortgage loan modification can help you and your family keep your home. If you’ve missed a payment, or know you’re about to miss a payment, the most important step is to talk to your lender as soon as possible. Your lender can explain your loan modification options and discuss the requirements for modifying your mortgage loan. If you have questions about this process or want to know more about mortgage loan modifications, please reach out to Burrow & Associates at (678) 323-2394. We’ll help you take a proactive approach with your mortgage servicer and work on getting your finances back on track.

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