Confused and frustrated about how to qualify for a loan modification?  There are a few tips and little known secrets to presenting your lender with a loan modification application that will get a quick review and have a good chance of approval.  If you can get a handle on how to present your unique situation in the best possible light and in an acceptable format, then you are on your way to a lower home loan payment with a loan modification.

One of the most important, yet confusing parts of the loan modification process is the borrowers debt ratio.  Most homeowners have never heard of debt ratio - so just what does debt ratio mean and how can you find out what your debt ratio is?  Simply put, debt ratio is a percentage figure that represents how much of your gross income is spent each month on your housing expenses.  Housing expenses include your principle & interest payment, property taxes, homeowners insurance and HOA dues if applicable.

One of the most important qualifying conditions a lender will look at before deciding to grant a loan modification is if the homeowners debt ratio is at an acceptable level.  What is acceptable?  Well, it may vary slightly from lender to lender, but a general rule of thumb is no more than 45% debt to income ratio.  If you submit your loan modification application with a substantially higher debt ratio, you have a good chance of being denied a loan modification.  So, you can see it is very important to get this calculation right and prove to your lender that you will be able to pay the new house payment now and in the future.

First step, pull out your most recent mortgage statement, tax bill, homeowners insurance bill and HOA statement if applicable.   Get a calculator and a pencil and paper handy.  Take your annual tax bill and divide by 12, do the same for your homeowners insurance-that will give you the monthly amount to use for your calculations.  Add up the monthly amount for each expense.  Now divide that total by your total gross monthly household income.  For example:

$1200 principle & interest   +   $110 monthly property taxes

$ 50 monthly insurance +  $ 75 HOA

$1435 total divided by $3800 gross income = 37% debt ratio

You debt ratio will probably be over the 45% figure using your current, unaffordable home loan payment.  Now comes the important part, you need to calculate your debt ratio using the proposed, lower monthly mortgage payment which the loan modification will provide.  This proves to your lender that even though you obviously cannot afford the current high payment, you can afford the new home loan payment and if they approve the loan modification you will not fall behind or default on your home loan. 

If you would like detailed instructions on how to properly prepare and present an acceptable loan modification application to your lender, order and download The Complete Loan Modification Guide now.  This is a low cost, easy to follow handbook that will take you step by step through the loan modification process.  You will receive everything you need to present a winning loan modification application to your lender.  Make sure you have all the information you need before you contact your lender about a loan modification.  Order and download The Complete Loan Modification Guide and get started today.

If you would like more information about loan modifications, visit us at:

http://www.myloanmodificationcenter.com