Question
Will my income not qualify me for a loan modification?
My application was declined for the following reason by my lender and I want to make sure it is correct. a) I haven't been able to make payments on my mortgage and they said I have to be current in order to qualify b) they said my income is too low to cover all of my expenses (car, credit card etc.) and said it should be at least twice as much as it is which doesn't make sense. I said I'd be able to afford my current payments if it was that much higher so I don't feel I was getting a straight answer which is frustrating because they all sound not too intelligent and their error will cost me my house. Am very stressed and can't seem to get help. Any advice?
4 weeks ago - 2 answers
Best Answer
Chosen by Asker
The lender takes your loan modification request and determines the amount of income verses the amount of debt you have each month. I would call your lender and request a reconsideration. Talk to a real person and ask them to explain exactly why they denied you. See if there's anything you can trim from your budget in order to get the modification. Also, request they tack any arrearages at the end of the loan. Sometimes it's better to just walk away. If the amount you own on the house far exceeds the value - it may make more sense to walk rather than fight a losing battle. Good luck!
by Rita Gibbons
4 weeks ago
Asker's Rating: 
Other Answers
When it comes to loan modification, lenders aren't willing to do this for people they believe will just end up defaulting anyway. When you originally financed your house they made sure you could afford the payments before they loaned you the money with consideration to your debts at the time. Apparently your other debts have increased to a level that even if the lender modified the loan, you still couldn't cover all your expenses under your present income. In addition if your home has decreased in value from when you originally purchased it, your hole is even deeper. When they say your income needs to be twice your debts, they are referring to your debt to income ratio. This means that you need to have twice as much money coming in as you have going out to pay for things on time (credit cards, cars, boats, etc). If you don't, it is a bad bet that you are able to pay your mortgage payment on top of your other debts. My guess is that there was a misunderstanding about how the debt to income ratio was calculated. You were supposed to report your monthly minimum payment on each credit card, and the monthly payments on your other loans. Or, your income has simply dropped below the level of affordability. If it is the first one, do what ever you can to become current on your existing loan, and reapply for modification. Good Luck!
by linkus86- 4 weeks ago