Most homeowners mistakenly believe that their mortgage bank wants to help them keep their home and will be understanding and sympathetic to their financial hardship situation. The sad truth is that banks do not care about our personal situation – they only are concerned with making money. So when you call your lender and spill out all of your financial information, you could be falling into a trap that will result in your loan modification request being turned down! Remember that you lender is trying not to lose any money, and will not hesitate to use certain tricks to gain the advantage over you.
A loan modification is only offered to homeowners when it is in the best interest of the lender to do so – not necessarily because it is the best option for the borrower. If the bank can save more money by foreclosing on your home then that is what they will do. The only way you can convince your lender to offer you a loan workout instead is to prove to them in black and white that you are a good candidate and that it actually makes more sense to keep you in your home making payments instead of taking the property back. Now, the next question is always, “But how in the world do I do that?”
It’s simple, when you contact your lender to apply for a loan modification, do not disclose your financial information to them until you have had time to fine tune your budget and know that the information you are submitting fits right into the standard approval formula. The tricks and traps that lenders use are designed to get you to say or do something that will throw you out of the loan modification programs, so you need to be extremely careful and well prepared before you begin the application process. Since there is an actual loan modification approval formula, you can use this very same formula to prepare your financial statement – this is the only way you can know where you may need to adjust your figures before your lender reviews them.
This may all sound very confusing and even a little scary – but you can make it easier to figure out by using a loan modification software program that actually mimics the standard formula and will automatically show you how much income, expenses and savings you need to show in order to meet the approval guidelines. You can then use this information to fine tune your monthly budget and then feel confident that the information you are submitting to your lender will have a good chance of loan modification approval. Don’t fall into the tricks and traps your lender has waiting – learn and be prepared to win the battle to save your home.