FHA Loan Modification involves the change in the loan term and this modification in loan is permanent. FHA modification programs are available for the persons who have financial problem and have the danger of foreclosure. So generally to stop the foreclosure the option of loan modification is opted.
To begin your FHA loan modification process, the original loan term must have completed one year term. Along with this three of the mortgage payments must be due or unpaid. Any increase in the living expenses and loss of income that can be verified makes you eligible for the FHA loan modification program.
The FHA loan modification programs involves the following things:
Changes in the interest rate.
Modification in the term of loan that is generally extended to decrease the monthly payment.
While doing FHA loan modification there will not be capitalization of the administrative expenses, which also include foreclosure cost and late fee. The FHA loan modification options convert any loan into fixed rate mortgage and any default thereafter will be considered as a new default. Also in the mortgage modification, the total amount can be re-amortized or the term of the home loan can be extended for the period not more than 10 years. In FHA loan modification, the remaining principal can be more than the principal balance of the original loan.
FHA Loan Modification Process
To modify the loan first of all prepare a hardship letter that will contain all the circumstances that are leading to the FHA loan modification option. This should also contain your efforts to come out of the situation. Then make the financial statement so that lender find it easy to modify the loan. FHA loan modification also needs your documents such as credit history, employment history, income and expenses. So get these and submit it with the mortgage lender. Here take the help of experts in preparing the documents. The expert lender will give you the FHA loan modification guidelines that are used to follow stepwise procedure for the same.
Your application for the FHA loan modification can be rejected if you are applying it to reduce the monthly payment because you want to use the additional money for other purposes. The bank will also see if the loan modification is beneficial for the bank or not. This depends upon the economic condition of the market at that time. If it is not then you wont get the FHA loan modification help.
Getting FHA loan modification need substantial proofs showing your present financial condition. The authentic documents will really help you in getting this modified loan and you can then come of the hardship, if any.