The pursuit of owning a home or parcel of land was, for many years, the American dream. Now, the Center for a New American Dream has re-envisioned this aspiration, stating the new American dream focuses on more of what really matters, such as “…creating a meaningful life, contributing to community and society, valuing nature, and spending time with family and friends.”
While owning, and keeping a home still holds true as an American dream for many people today, there are incidences and obstacles that can prevent someone from attaining this endeavor. Understandably, being financially capable of owning a home is one of the most important aspects of accomplishing this goal. Many people starting their home-owning journey don’t think about the prospect of facing a foreclosure, but this is a very real and unfortunate situation that homeowners can face.
Given that reality, it’s important to live within your means and to consult with a specialist about the ins and outs of achieving home ownership. One of the major steps for owning a home is securing a mortgage, ideally with a low interest rate. Because a house is likely the largest purchase most of people will ever make, the lower the interest rate and monthly payments, the better. If you’ve never purchased a house before, be sure to check out our blog, The Steps of Home Buying Explained to learn more!
If you are a home owner with an existing mortgage that is greater than the value of your home, you may be qualified for a loan modification, which is a permanent restructuring of a mortgage so the borrower can make more affordable payments. This is usually something that occurs as a last and best hope for people in danger of losing their homes to foreclosure. If you do need to modify your mortgage loan, it’s important you follow the advice of a housing counselor and execute the application process perfectly. Other tips for securing a successful mortgage modification include:
1. Maintain realistic expectations – First of all, it’s important to evaluate how you got into the situation and how you plan to get out of it. It’s important to cut back on spending and report accurate income and budget figures to servicers. It’s also imperative borrowers maintain realistic expectations. You may prefer a monthly payment that is 28 percent of the monthly before-tax income, but be prepared for something higher, like 31 percent.
2. Create a paper trail – This will be a very finicky process, so make sure you create a paper trail. An electronic paper trail is preferred, but you can also keep track of every detail regarding your loan modification application by writing down important names, employee numbers, dates, times, office locations, and more.
3. Make sure you’re financially literate – This tip may not seem important at face value, but it is crucial you’re, what we call, “financially literate,” throughout this whole process. While housing counselors and servicers may have some empathy for your situation, they’ll want to see that you know what is going on with your money to limit any confusion. Talk to an expert at Landmark Title Assurance Agency about ways to prepare for these conversations.
4. File a complaint, if necessary – If you get rejected for your loan modification, don’t lose hope because there is something you can do to combat this issue. You can file a complaint with The Office of the Comptroller of the Currency (OCC). This government entity oversees federally chartered, national banks. If you get rejected, don’t hesitate to visit the OCC’s website at HelpWithMyBank.gov and file a complaint!
While we truly hope this doesn’t happen to anyone, we still feel it’s essential to be prepared and understand the process for securing a modified mortgage loan. If you have any questions or concerns, please do not hesitate to reach out to our team!