Loan Modification Qualifications

Loan Modification qualifications are also referred to as Mortgage Modification qualifications.

These qualifications screen the eligibility of a home-owner to a ripe candidate for a loan modification.

Criteria

Every lender has a different set of rules and guidelines. However, at a higher level, the eligibility remains the same.

In order to best understand the criteria, consider the before, now and after scenarios for your loan.

Before
You could afford the house and the mortgage. You were making regular mortgage payments and not delinquent.

Now
Something has changed. You either lost your source of income or have had a reduced income. You no longer have the same amount of money coming in as you did before. This could be due to a financial hardship. This has caused you to be delinquent on the mortgage or you will be delinquent if an ARM rate adjustswhen its term resets. You have done everything possible to make ends meet and are finding it difficult to keep up with the existing situation.

After
If a loan modification were to be granted by the lender, you would have reduced mortgage payments. You will be able to afford the payments going forward with this new payment arrangement. Or, your hardship is temporary and you need some relief for a while and can resume subsequent payments when your hardship is over.

When would I NOT be eligible for a loan modification?

If you are making sufficient money every month to be able to afford the monthly payments and don't have any hardship, you may not qualify for a loan modification. In such a situation, refinancing may be your best option.

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