When you can no longer afford to pay your mortgage, you may feel tempted to stop making these payments. However, you could be able to receive a loan modification. In this situation, your lender usually needs to see several kinds of documentation.
You might hesitate to speak to your lender until you feel that you are out of options. Nerd Wallet recommends that you reach out to your lender as soon as you know that you cannot make payments. It may take some time to receive a modification. Early communication allows you to begin working toward a solution as soon as possible.
How do you demonstrate financial hardship?
Realtor says that you have to explain your financial hardship to receive a modification. You could write a letter that lays out how your circumstances have changed since you first took out the home loan. Additionally, you usually need documentation verifying your situation. If you lost your job or took a pay decrease, you might include the letter informing you of this change. If you have hospital bills, you could include one of those statements.
What other documentation do you need?
You will most likely need to submit records about your personal finances. One of these documents should be your mortgage statement. You should also include bank statements so that the lender can see that the mortgage payment is no longer affordable. Additionally, include pay stubs. These show your lender how much you have earned in a year and can also help reflect a loss of income. You may also want to submit your federal tax return.
Even after you demonstrate why a loan modification is necessary, a lender may refuse to grant your request. In this situation, you can usually file an appeal.