By Shirin Sharkawi, Author of Save The American Dream, How to Modify Your Mortgage and Rebuild Your Credit. www.savethedreambook.com Whether you are at risk of losing your home, or you feel you are overpaying on your mortgage, a loan modification can help you. Your home is one of the biggest investments you will ever make, and taking the steps to save it from a foreclosure, lower your payments, or save thousands of dollars each year is worth the time to educate yourself, and be well prepared before you contact your lender. Loan modifications increase in a market where home values drop drastically and consumers do not have the equity to refinance their homes. Your credit score does not matter and it does not matter whether you are upside down on your home loan or at risk of a foreclosure sale. It is never too late to pick up the phone and tell your lender you want to Save your home and you need their help. It is alarming that 60% or more of families who lose their homes do not contact their lender for a workout option. Do not let pride get in the way of helping you save your home. The people who work for the lenders understand your struggle; and the more honest you are with them and the more organized you are with a plan to get back on track, the better your chance of having a successful loan modification. A Loan Modification alters one or more aspects of your home loan, such as the interest rate, the period of amortization (how long your payment is spread over such as 30 years), or the principal loan amount which is the amount you owe the bank. Is a loan modification easy? Believe it or not, sometimes it is as easy as calling and giving your lender your expenses and hardship, and getting an answer on the spot; or you may have to go through a few months of back and forth negotiations. Avoid contacting your lender before you educate yourself on the process. Understanding the process and being well prepared will make the difference between successful or failed loan modification attempts. It is very clear that the big banks are not easily giving consumers a loan modification, even if they are eligible. Banks such as Bank of America and Wells Fargo, both having received Tarp Money, have modified less than 5% of all eligible consumer loans. If you are one of those consumers not getting your lenders help, empower yourself by telling your story at www.lendershallofshame.com Most consumers who are turned down did not qualify based on the income and expenses they gave the bank, which is why it is important to understand the income and expense ratio your lender wants to see in order to approve your loan modification. You can make too much or too little and be turned down. I cannot stress the importance of preparation before you submit your loan modification package. Here are some quick tips on getting ready for a successful loan modification. 1. Establish your Budget - Put all of your expenses together, except for your mortgage payment, and what is left with a cushion of about $200 is what you can realistically afford to pay on your mortgage. This is considered the disposable income. 2. Establish The Type Of Loan Modification That is Right for You This is done by working with a mortgage calculator, your current balance and your disposal income. Some modifications alter one aspect (some two and some all) to achieve the desired goal. You can access the mortgage calculator at www.savetheamericandream.tv to establish the right rate, amortization or principal reduction you need to establish your desired payment. 3. Contact your lender- Request a loan modification package, if your lender tells you that they can take your application over the phone, do not move forward unless you have taken the above steps, to avoid being turned down. 3. Establish the value of your property This can be done by pulling local sales from your area, contacting a Real Estate Agent for an assessment or by paying $250-$350 for an appraisal. You must include supporting documents to the lender such as proof of sales in your area, an appraisal of your property, or classified listings of properties for sale in your area that compare to yours. You can also use such sites as www.zillow.com . 4. Collect your income documentation w2s, tax returns or banks statements, and profit and loss statement if you are self employed. If you are getting child support, alimony or other income, include 3 months of proof of that income. Some lenders will accept unemployment as income, ask your lender for details. You are also able to use the income of other friends or family members living in your home but you must also list their expenses. If you are making too much or too little you can get turned down for a loan modification that is why it is important to prepare. 5. Write a hardship Letter - Be brief, but specific, and show the lender that you had set backs but have taken control of your situation and can get back on track if they assist you. For a complete guide on how to modify your mortgage, log on to www.savethedreambook.com and pick up a copy of Save The American Dream, How to Modify Your Mortgage and Rebuild Your Credit. The HOW TO LOAN MODIFICATION MANUAL is written by housing advocate, talk show host and housing educator, Shirin Sharkawi. The manual provides consumers with the step by step process to prepare for a loan modification and negotiate with their bank. Shirin Sharkawi has been working to Save The American Dream for over 6 years by educating consumers, providing them with access to fair financial products and creating accountability measures to keep lenders and brokers honest. Shirin Sharkawi is a weekly guest on the nationally syndicated Warren Ballentine show every Monday Morning, and is a regular guest on radio stations across the country such as Hot 92 Jamz, KISS FM, Urban Radio Networks, XM, Sirius Radio, KJLH and many more. Shirin blogs to thousands of homeowners each week at www.savetheamericandream.tv $2.00 from each book benefits food banks and transitional shelters, across the United States
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