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Susan Gregory's Blog

By Susan Gregory | Agent in 92624

Loan Modification Process-How to Figure Debt Ratio

The loan modification process can be confusing if you have not ever worked with applications or financial statements before.  There is a way to prepare your application so that you have the best chance of approval with your lender-the secret is to learn what it is they are looking for and then fine tune your figures so that you fit into the approval guidelines.
One of the most important qualifications is called Debt Ratio.  The federal HAMP option requires that you meet a pre-determined debt ratio in order to qualify for assistance.  For example, your current payment must equal more than 31% of your household gross monthly income.  Not sure how this calculation works?
Here is the basic formula for figuring out your own debt ratio:
  1. 1. Total all monthly housing expenses-this includes your mortgage payment, monthly amount for your property taxes and homeowners insurance and any HOA dues.
  2. Total all monthly gross income
  3. Now, divide your housing expense total by the gross monthly income total
  4. The result is your debt ratio - this is actually your "front end" ratio - meaning just your housing expenses.
  5. Total all of your other expenses (utilities, credit cards, car payments, etc) and add those to your housing expenses, divide by gross monthly income and you have your total debt ratio.
So what is an acceptable loan modification debt ratio?  Well under Obama's HAMP option, your new target payment will equal 31% of the gross income.    If your loan can be modified using the standard methods under the Treasury Plan, then you are a good candidate.
Remember, your financial statement must be prepared correctly so that it proves you fit into the approval guidelines.  If you would like some help to calculate all of the required figures, then consider using a software program designed just for homeowners.  All the calculations will be done automatically for you and all you have to do is put in your own monthy income and expenses-you will see immediately if you need to make any adjustments.

Get the help you need to prepare your own accurate and acceptable loan modification application.  The Complete Loan Modification Guide kit is the best selling do-it-yourself system that takes the guess work out of preparing your financial statement, hardship letter and all of the required forms your lender needs.  You get an easy to use software program-Loan Mod Quick App-as well as an easy to understand handbook with step by step directions.  Why take chances with your application?  Simply input your unique financial information into the Loan Mod Quick App and it calculates it all for you!  It couldn't be easier-end the frustration-Visit myloanmodificationcenter.com and order today-immediate download!

 


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