©Idea go - freedigitalphotos

©Idea go – freedigitalphotos

To avoid foreclosure most people meet with their lender and try to get them to restructure their mortgage.  Both the homeowner and lender try and come up with ways where the mortgage is more affordable so owner can meet the monthly payments easily.  This is ideally how it will happen, but there are some minimum requirements you should take into consideration before trying to restructure your mortgage.  Meeting these requirements are necessary to meet before trying to get a new mortgage, otherwise you will just be wasting your valuable time on a option that won’t work to stop foreclosure.

The qualification requirements for restructuring your mortgage are quite different than for the first time you bought your home.  The banks know the reason you are restructuring is because you need the money; this is not something that should be hidden.  Banks want to avoid foreclosure, the same as you do, but the lender will have some guidelines they will have to follow, before giving you a new mortgage.

First and foremost, you will have to prove to the lender that you will be able to make the new payments on the loan.  You need to come to their office with proof that you can put a certain amount of money, towards the mortgage each month.  It is good for you to work this number out before you actually go in to meet the lender, that way when they give you a payment option that is too high, you can tell them that right away.  If you truly want to stay out of foreclosure a second time, you have to be honest with your lender.  So even if your suffered a financial set back, you need to go in there with proof (a new job offer, a raise in your current job, a second job, another person that will help contribute to the loan) that you can and will make the new payments.

If you have poor credit, you may want to look at trying to get it cleaned up before you go to ask for a new loan.  If you have damaged credit, when applying for a restructure in your mortgage, your mostly likely will be approved for an option that comes with a higher interest rate, leading to a higher monthly payment.  In this case a restructure is not going to help you, unless you know you can keep up with the new higher payments, you will just find yourself in foreclosure again.

Requirements for a Restructure in your Mortgage

Income requirement are the same as when you first got your mortgage loan.  The maximum amount of income allocated to a mortgage payment cannot exceed 28 percent.  As stated early you most prove to the lender that you have this income to put towards the mortgage.  Be honest with your lender how much you can afford, otherwise when you facing foreclosure again, they won’t be helping you.
You must prove your employment and finances with the following documents:
•    Complete last year and the previous years signed federal tax return forms
•    Last year and the previous years W2 Federal
•    The most current pay stubs within 30 days for each borrower
•    Last three bank statements for all savings and checking accounts
•    Evidence of additional income (rental agreements, child support, alimony, military allowance).

If your are self-employed you must also show:
•    Last year and the previous years signed federal corporate tax returns.
•    Last year and the previous years and current year to date signed profit and lost financial statements.
•    Current year to date signed state tax return forms.

Homeowners and buyers today are now facing much stronger requirements from lenders.  This is mostly due to the government coming and examining the questionable lending tactics that started the whole foreclosure mess that we all are facing today.  So if you got your loan awhile back you will notice the credit score requirements being a lot stricter.  So make sure you come prepared and with all of your documentation of your income, otherwise you’ll just wasting time when there are other options you should be looking at to avoid foreclosure.

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