You’ve probably heard that the single greatest reason why people go bankrupt is for medical bills. If you have bad health, lose your job, or a number of other unfortunate things happen, you may find you have a problem with your mortgage. If you are unable to afford your monthly mortgage payments and find yourself falling behind, you may be able to modify your home loan to catch up and avoid foreclosure.

A loan modification is a permanent restructuring of your original loan to provide you with a more affordable payment. Here is what you need to know about modifying your loan due to financial hardship:

You Need To Be Qualified

Not everyone can restructure their loan. Your lender will have to agree to a modification based on a series of criteria such as:
•Showing you can’t make your current payment due to financial hardship
•You can’t refinance the loan
•Your debt-to-income ratio has increased

If your lender decides to modify your loan, you will go through a trial period to show that you can afford the new monthly payments.

It is essential to remember that lenders want you to be able to repay your loans. Contact your mortgage company to discuss your situation and work together towards a solution.

You Need Financial Proof Of Hardship

For your lender to modify your loan due to financial hardship, you will need to provide financial proof. That means getting together:
•Recent federal and state tack returns
•Bank statements
•Pay stubs
•All information regarding your loan
•Letter of hardship

A letter of hardship is a letter you write to your lender to explain your situation. You will also have to submit an application with your information in addition to the above.

Beware Of Loan Modification Scams

If you need to modify your loan, it is recommended to go directly to your lender and avoid loan modification companies. Loan modification companies act as middlemen between you and your lender and it is often cheaper and faster to handle the process yourself.

In addition, many loan modification companies are less than honest, if not an outright scam, charging high fees for actions you can easily do yourself, like mail paperwork and reply to messages from your provider.

Ruth Schoenherr is a mortgage broker who will help you find home loans in the Clearwater, Palm Harbor, Largo, Safety Harbor, St Petersburg and Tampa Bay area. For more information, go to her web site at www.ClearwaterMortgageBroker.net or call at 727 447-2418.