Any homeowner who wants to get a home loan modification will need to write a letter of “Financial Hardship”. This letter is an important key to getting approved for a home loan modification. Most people have no idea how to write one of these letters, or where to look for help. Here are some mistakes, and tips, for homeowners who need to write a letter of “Financial Hardship”.
Probably the biggest error people make when writing their letter is taking the name “Hardship” to literally. This letter should not be a drawn out sob story about how bad your situation got, and how much it affects you. As opposed to what most people do, do not truly explain your life’s problems. This letter needs to convince the mortgage lender or bank you are trying to work with that if you get help with your home loan, you will not miss, or be late, on any other payments. This is the only thing that truly concerns the mortgage lender or bank.
When writing your hardship letter, always consider what the potential lender or bank wants to get out of the deal. As opposed to having you miss more payments, prove to them that with your new plan, a mortgage modification will benefit both you, but more importantly them. Believe it or not, a lot of homeowners still default after getting a mortgage modification they requested. This is why a “Financial Hardship” letter that is well written is crucial.
Never try to put this letter together at the last minute. Instead, make sure to take a good amount of time to thoroughly review your finances. Aim to set aside up to 40% of your gross monthly income towards your home loan payments every month if you are to get approved for a home loan modification. Make sure any income you claim in this letter is absolutely verifiable. Also inform them if you are to receive and inheritance, bonuses, or raises in the near future. Cut back on expenses as much as possible, and list all of your true needs like food, gas, heat, and the basics as monthly debts.
After you have looked at your finances, then write your letter of financial hardship. Prove to them that if they were to lower the monthly payments by an amount you have figured out, that you will not miss another monthly home loan payment. They do not want to have to deal with you again in the future if you need help, and at that point you will most likely get denied anyways.
Taking your time and writing a thorough, well thought out letter of financial hardship will separate you from the masses of homeowners hoping for the same help. Do some research and review your finances to help ensure you get a home loan modification approval.