Last week I talked about why banks modify loans and who can qualify to get their loan modified. This week I will go over the steps that banks now go through in order for you to modify your loan. The steps aren’t very complicated but you should know what to expect to make sure that the process goes as smoothly as possible.
The first phone call to your bank about a loan modification is often the hardest. You don’t know what they are going to say, and if you are behind in payments you are worried that they may say that they can’t help you and they are going to foreclose. Well, I’m here to tell you don’t worry. Banks don’t want your house right now any more than you want to give it to them. They are in the business of making money on loans. They are not landlords and most banks have more houses on their books right now then they know what to do with. So the banks at this point in time are more than willing to try and help you stay in your home or make your payment more affordable.
So when you make the first phone call you will tell the bank either that you are behind on payments and want to try and modify your loan or that you anticipate First Year In Your New Home having a hard time in the near future and would like to see if they can help by modifying your loan. They will then ask you several questions such as :
Do you occupy the house or is it a rental?
Do you want to keep the house?
Do you have any money for a down payment on your arrearage (if you are behind)
These questions are to qualify you for a modification and also to see if you qualify for the government backed modification program. This program is the first (and sometimes best, but not always) option that banks want to present you with. This program in a nutshell allows the banks to sell your loan to the government and the government will then Agent To Agent Marketing give you a lower interest rate on your loan to keep you paying on it. Sometimes this rate is as low as 3.5% for 30 years fixed. If you qualify for this program then they will send you out a large package to fill out and they will request supporting documents. It is best to tell the truth because in many cases they can help most families.
If you do not qualify for the government backed program then the bank will try and qualify you with one of their own in-house programs. This can vary greatly depending on the bank. The most important thing to remember is to be brave, talk to your bank, and save yourself some money.
Till next week, Good luck and God Bless