Info: Modification of the debt ratio
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How to vary your your debt ratio: Are you frustrated and confused about how to qualify for a loan modification?

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Are you frustrated and confused about how to get a better qualification to get a loan modification? Yes, there exist several of important tips and secrets. And the professional know that it will help to present your home loan lender with a exact loan modification application. Such a loan modification application will get a rapid review. Then everyone will have a much better chance for approval. When you have learned how to present your special and unique situation in an suitable format, then it will be on the way to lowering your home loan payment.

Often borrowers are declined due to their debt ratio. This is one of the most key factors a lender looks at when he is deciding to grant a loan modification. Recently most homeowners do not know what their debt ratio is. Also they have no idea how to figure it out by this reason they will qualify for a loan modification. Just what a debt ratio is and how do you figure it? Simply expressed, debt ratio is a percentage figure that represents how much of your gross income do you need to spent each month on your housing expenses. And what exactly is housing expense? The housing expense is the total of your principle and interest payment, insurance, property taxes and HOA dues if applicable.

If you want too get a loan modification approval, the debt ratio should be still at acceptable percentages. And what is acceptable? That depends and may vary small between lenders. Altogether the most require nearly a maximum of 44% debt to the income ratio. When you give a loan modification application to the lender and also with some substantially increased debt ratio than 44%, your wish will nearly  always be denied. Then you need to prove to the lender that you are be able to afford a new house payment, recently and also in the future by having a lower and acceptable debt ratio.

It is necessary to use a important minute and pull out the current mortgage statement and also your recent tax bill. Additional you need your  insurance bill and also the HOA statement (for the case it is applicable). Then divide the recent tax bill and the insurance bill by twelve to have the amount for the monthly payment. Do not wonder, it may be high. After that add up the sum for each to get the total monthly housing expense. At the end divide that amount by the gross monthly income of the household. 

Here is an example: 1400 interest and principle ad 120 the property taxes (monthly) + sixty  monthly insurance plus sixty HOA = 1550 housing expense. 1550 divided by 3500 monthly income (gross). The result will be a debt ratio of 44,3%.

For the case you have trouble making your current payment then your recent debt ratio will possibly often be higher than 44%. Then it comes a important part for you. You now have to make a calculation of the debt ratio again. That second time please use the lower, the proposed monthly mortgage payment for the repeated calculation. That is how it can be tested to your lender that while you are not able to afford the recent payment. Then you will be able to pay a new payment and they should grant you the loan modification. Then you show them mathematically and that in black ink and in white ink that your payments will not go down behind or default again in future.

A lot of additional important factors of a correct loan modification application exists which will help to increase the chances when you ask for a loan increase with your lender. Only use the time to be informed about the loan modification process itself and be really prepared when you speak with the bank with your wishes. You need just a small portion of time and effort learning how to be prepared for a loan modification application. That then possibly mean the difference between an approval or to be denied. That is the difference. Your lovely family home and credit are certainly worth this effort! So get well informed and all get going on well.

External Tip: If you are interested in a new house or flat you should look at this page: Baufinanzierung ohne Eigenkapital. You will get a lot of information what is possible and how you can save money.


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