The layoff means that you probably no longer have the income to justify a refinance. Don’t be surprised if the re-finance is completely denied now that there is no (or less) income to support it. Loan modifications are generally only available to people who spend more than 31% of their gross monthly income on their loan payment. In addition, it is often an interest rate reduction only (not a modification of the principal balance). This might be your only hope to reduce your loan payments at this time.

A modification is typically done if at least one person can prove they have a job and income to make the payments. Some banks only allow $500 to $1000 in surplus to qualify for a modification meaning you have to show you can pay something. A modification may take up to a month or two or longer. In the meantime your mortgage could go into default and start a foreclosure issue. Doesn’t matter what happen if you have a hardship case but you have to have some type of money coming into the home so that they can adjust your mortgage to what you are bringing home. You will have a pre modification agreement and once you satisfy this you get your modification. A pre modification is three months of a small payment on time.

In a perfect and forgiving world, you would get a discount or some leeway for your mortgage. However, the reality is the opposite. You are now more of a liability to the bank or lender. You have less cash in total, which means it is less likely you will be able to pay your mortgage.

This entry was posted on Saturday, August 1st, 2009 at 2:54 pm and is filed under Loan Modification. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.