How do I calculate to see if I qualify for a loan modification? Santa Clarita Real Estate Video Update

One question Santa Clarita homeowners often ask us is: How do I know if I qualify for a loan modification?


Loan mods are different from refinance in that you are typically underwater on your mortgage in a loan mod and you are asking the investor to reduce your interest rate (or maybe even reduce the principal), whereas a refinance has to have equity to change the terms.

There are many factors that go into each modification. Every loan has a different investor which could be different from the company you make your payment to. Depending on each investor and their specific guidelines this will determine whether you qualify or not.

The main guideline that applies with almost every lender and modification is your debt to income ratio (DTI). The loan specialist assigned to your file will collect a number of documents. Most investors will look to see if a modification will lower your mortgage payment to 31% of your gross monthly income. If you make more they will say you can afford mortgage.If you make less the investor could say it is a frivolous modification because you cannot ultimately afford the monthly payment and is enough reason to rule you out of the modification. Upon finding that your financial status could put you in a place of affordability of loan they will ask for additional loan modification documents such as:
Request for modification form
Last 2 Pay Stubs (Must be the most current)
Last 2 Months Bank Statement (Most Current – all pages)
Last 2 years Tax Return
4506T Form
Income and Expense Form or Financial worksheet

They may ask for other following documents depending on any questions that may come up with the records you provide.

The modification calculator helps determine any benefit you may receive by adjusting the terms of your existing first mortgage. Most modifications will lower your mortgage payment to 31% of your gross monthly income. This is the percentage that will be used in this example.

The amount of your modification (if eligible) depends on a variety of factors. Your mortgage company or a housing counselor will be able to help you determine any benefits from modification. As such, any results returned by this calculator should only be used as one of many factors in evaluating your options. This calculator returns information based on inputs regarding your existing mortgage information. It is important that you provide accurate information in order to receive more realistic results. Your mortgage company may use different information to determine eligibility and your individual results may vary from the results shown by this calculator.

All information deemed reliable but not guaranteed. Each scenario is investor driven and could vary.

If you would like some advice or help in regards to Loan Modification on your home, please fill out the contact form below and we will get in touch with you.

HomeBuyer Packet pdf

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