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Wednesday, August 7, 2013

Real Estate Investing Basics and Loan Modifications

If you are considering real estate investing, it is important to understand exactly what a loan modification is, and why they are discussed so frequently. After all, loan modifications have been in the limelight quite a bit lately. The reason behind the talk of modifications and refinancing is the state of the housing market. Unfortunately there are a huge number of people who are having problems making their mortgage payment. Due to the economy many people have lost their jobs or have had their hours cut. As a result the amount of take-home pay they receive has been drastically reduced.

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When you decide a modification of the home loan is the answer to your situation, you may find your lender is not quite as excited about this option as you are. Do not let them fool you. They stand to gain just as much from the loan modification as you do. After all, the lender will save money by completing a modification rather than having to foreclose on your property.

The process of applying for a loan modification will require you to fill out a financial worksheet. This will be used for the main consideration as to whether you get the modification or not. The worksheet will need to have all your contact information such as current phone numbers - work, home, cell - and your address, email address and a fax number if you have one.

The estimated value of your property will need to be included. The income you have presently will be part of the worksheet. The income from all sources should be included. This means child support, payments from settlements and anything else that brings money into the household. The next part will be your total assets. If you have a savings account, checking account, IRA, stock or bonds, any other real estate and/or rental property, all of this will be included as an estimate of your total assets.

Finally, the amount you have to pay out on a regular basis will be listed. This includes loans, medical bills, payments to the IRS and all monthly bills. All of the information should be as detailed as possible so this lessens the chance the loan company will have to call you and request more information.

Proof of your situation may be needed. This would include bills you are receiving and ones that you have received in the past. Even if the loan company does not ask for them, including them with your information could help and cannot hurt. Remember all the information you submit will be the basis for the approval or denial of your modification.

The last thing you will need is a hardship letter. This is a letter from you explaining why you are asking for a modification to your home loan. The circumstances that have occurred causing you to fall behind in your payments or that are about to cause a default are extremely important. Be as truthful as possible and explain what has happened. For instance if you lost your job but have since returned to work, this is something your lender needs to know.

If you are still unemployed but are expecting to go back to work, include this information. If you had an illness that put an unexpected drain on your financial situation, this is information that is needed. Being as detailed as possible will increase the chances that you will receive a loan modification. Keep in mind, this is beneficial for the lender as well because a foreclosure can cost them much more and tie up the property for up to a year.

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