Canonical Hour

If you are looking into a home loan mod, you have to understand that lenders do not want to mod your loan in the first place. This means that you are going to have to take the first steps to get the process going.

If you do decide to move forward, your loan modification expert should ask a few of the following questions:

1. What percentage of yourgrossincome (your income before tax deductions) is now devoted to housing costs, meaning mortgage principal, interest, taxes and insurance ? PITI.

2. How much could you pay each month if PITI was limited to 38 percent of your gross income?

3. How much could you pay each month if PITI was limited to31 percentof your gross income? This is an important question because the FDIC has been using a 31-percent benchmark when modifying loans made by IndyMac, the lender taken over by the FDIC in 2008. The 31-percent standard has now spread to other programs.

4. What are your assets? Include such items as savings accounts, IRAs, other retirement accounts, certificates of deposit, stock, bonds, vehicles, other real estate. Be sure to include account numbers, the date when valued, contact information for the account holder such as a brokerage or bank, balances and required payments.

5. What is the value of your home? Local real estate brokers may be willing to help provide a general valuation on a pro bono basis with a comparative market analysis (CMA)or abroker?s price opinion (BPO)? it?s good PR for the broker and you could be a future source of referrals and business.

6. What are your debts? Include credit cards with account numbers, account information, total debt and required monthly payments. Also, student debts, auto loans, other mortgages, etc. Again, show account numbers, balances, required payments and contact information.

7. What are your typical monthly expenses for utilities, condo fees, gasoline, health insurance, child care, alimony, etc.

The next step in getting a home loan mod is making sure you have the right amount of money to pay for the process. A loan modification typically costs between $1995 and $3995. Some companies offer financing for loan mod fees which can help if you are low on cash.