Monday, August 27, 2012

Financial Work Sheet on Your Mortgage Modification and Avoiding Common Mistakes

Its 2010, you are behind on your mortgage you might be afraid someone will be knocking on your door any day now serving you a foreclosure. Don't be embarrassed 1 out of 8 homeowners are behind on their payments or facing foreclosure. Time to take action. Most lenders have a modification package that you either request over the phone, or you can simply downloaded from their website. Others such as Bank of America (formally Countrywide) an associate puts your financial situation on a computer and the computer tells him if you can or cant get your loan modified, I'll show you how to handle them later.

When you are listing your income and your debts, you must write down everything, calculate all your debts and avoid common mistakes. Write down your income, this includes money from your job, business, investment property, social security, disability, child support, alimony, even unemployment. Lets do an example: Mr. Andersen makes $60,000 a year from his sales job. he purchased his home in 2005 for $200,000 at 7%, 30 yr term. He makes a mortgage payment of 1330.70, 250.00 taxes, 125.00 insurance, 83.33 PMI, total payment $1788.94. He takes home $3950 after taxes. In 2005 with this income, and a credit score of 620 Mr.Anderson easily qualified for this loan. and was happy to become a homeowner.

Now it is Jan. 2010, Mr. Anderson is having a hardship, because of the economy, his sales are down. His income now is 40,000 annually. His take home pay is 2,550. His income dropped while his debts remained the same. He requests the modification package. Mr. Andersen writes his debts on his financial worksheet monthly bills, mortgages $1,330, Car $250, food $100, electric bill $100, clothes $200, entertainment $200, Christmas club $50, complete internet/ cable package 150, his cell (iphone) 150.00, Fantasy Football league $50, Country club membership $50, Exclusive gym membership $100. After he mails in his modification package. The bank 2 weeks later send him back a letter saying "Thank you Mr. Andersen but at this time we are unable to modify your mortgage, your request is DENIED.

So, why did Mr. Andersen get this denial? The banks are not modifying mortgages? Not in this case! The bank sees Mr. Andersen as a lost cause. They see his debts excessive, clothes 200, entertainment $200, full cable/internet package 150, cell phone 150, Christmas club $50, fantasy football league $50. Mr. Andersen is painting a picture that even though his finances are down he refuses to change his lifestyle, on to the next client who really needs a modification.

Should Mr. Anderson of painted a different picture and explain his debts and maybe remove some debts and change some of the wording, it would of told a different story. Lets start with his mortgage payment it is 1,330 but he didn't include taxes, insurance and PMI, for starters his full mortgage payment is $1,788.94. His car is 250, everyone that drives a car knows that there is gas we have to pay for, and you must have car insurance. This is easily $200 a month for gas and $150 for insurance. He listed he spends $100 a month on food. I went to chicken grill the other day and the meal alone for me and my girl friend was $20. Mr. Andersen low balled how much he spends on food. People spend in the ball park of $300 a month on food. Clothes $200 a month? what is up with that? OK Mr.Anderson has a new born. babies out grow their clothes every other month. w]When you include day care, formula, food, pampers it gets very expensive. Cell phone $150, as we saw Mr. Andersen has a sales job for him to be on top of his industry he needs internet access and 2,000 minutes on his phone to maintain customer service. This tells the bank he needs this feature for business and not pleasure. We all have a life and need to entertain ourselves in what we are into. Mr. Andersen does not need to tell the bank about his hobbies, gym membership, fantasy football should not of been mentioned on his modification package.

Now that we know this how should Mr. Andersen submit his financial worksheet? Lets try this, Mortgage $1,788.94, Car, gas, insurance $600, food, $300, Clothes $200 explained: I have a new born, cell phone $150 explained: used for business, entertainment $0, don't mention personal entertainment ( fantasy football, exclusive gym) This financial work sheet explains a completely different story. This loan is now in process for a possible modification if other parts are correct. When dealing with Bank of America which is over the phone and not a package where you fill out, have the numbers written in front of you, use common sense when you tell them your debts. explain how with basics such as Mortgage, food, car your ends do not meet. follow the same patterns above.

When submitting your financial work sheet of your modification package, it is important to take your time and differentiate the bills that are a must (mortgage, food, car, utilities) with recreational bills. When you do sit down and calculate where are money is going it also does help you out to make wiser financial decisions. Painting a correct financial picture to your lender will determine your loan modification or a denial.

Step by step loan modification DVD, is designed to help homeowners modify their own mortgage avoid foreclosure and keep you in your home. We look forward to helping struggling homeowners modify their loan and negotiate a reasonable mortgage payment with their lender. Let us guide you to a lower payment go to:


  1. When you are list your earnings and your financial obligations, you must create down everything, determine all your financial obligations and prevent common errors.

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  2. Mortgage fraud has grown to be common, especially after the financial upset that has plagued this country from coast to coast.

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