A big part of applying and qualifying for a Bank of America loan modification is meeting the debt ratio requirement.  This may be something you have never heard of before, but when it comes to loan review, this calculation is one of the most important things the bank will look at.  What is debt ratio and how do you know if your ratio is acceptable?  Here is the basic formula to figure it out.

First of all, a Bank of America loan modification will require that you complete a financial statement detailing your household monthly gross income and monthly expenses.  The bank will review this statement and based on how you complete it, you will either be approved or denied.  So, it is critical to understand just what they are looking for so that you can avoid any costly mistakes.  Your debt ratio is calculated using a formula like this:

Bank of America Debt Ratio Calculation:

Total monthly expenses DIVIDED by total monthly Gross income = debt ratio percentage

For Example:  Total monthly expenses equal $2800 and total monthly gross income equal $5200

2800 divided by 5200 = 53%  That would be your own debt ratio.  So what is required for approval for a Bank of America ?  That depends on the loan workout program you are requesting-there are a couple of options.

Federal Plan

Federal Plan

The Bank of America debt ratio requirement for the government plan called HAMP is standard and mandated by the Treasury Department.  You must be able to meet these standard guidelines in order to be offered this very beneficial loan modification.  If you qualify for this loan workout, your interest rate could be reduced to as low as 2%, your loan term extended to 40 years and some principal balance deferred or even forgiven.

The first approval guideline under Bank of America loan modification HAMP is that your current mortgage payment-including taxes & insurance and any HOA dues-equal MORE than 31% of your gross monthly income.  So if your current debt ratio is 31% or lower-you won’t qualify.  If however your ratio is over 31% then you have met the initial criteria for review.

Work on your budget now

Work on your budget now

Another loan modification option could be one of Bank of America’s proprietary or in house plans.  These are custom tailored for each borrower and these options can vary a great deal.  Generally speaking, the goal will be to get you a new payment that equals approximately 45% of your gross monthly income.  So if you do not qualify for a government HAMP option, you could be offered one of these other plans.

TIP:  Know how to calculate and meet the Bank of America debt ratio requirements if you want to have the best chance of success.  If you are confused about how to properly prepare your financial statement, then you can use a software program designed just to help homeowners with completing their budget correctly.  The Loan Mod Quick App software takes the guess work out of making certain that your figures are accurate.  Simply input your own income and expenses and all the calculations are done automatically.  Most importantly, you will see immediately if you need to make any adjustments to your figures in order to pass the approval guidelines.

Download immediately!

Download immediately!

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.

3 Responses

  1. Modification of Mortgage Loan Said,

    Normally I do not read article on blogs, but I would like to say that this write-up very forced me to take a look at and do it! Your writing style has been surprised me. Thanks, very nice post.

    Posted on November 8th, 2011 at 11:46 am

  2. Ohboy123 Said,

    Can someone please explain why a payment of an in house modification with Bank of America is allowed to be calculated and approved up to 45% of your gross (pre-tax) income? When a HAMP modification is at 31%.

    If Bank of America approves an in house at 45% of your gross income, I would assume that you are bound to fall behind again, especially in today’s world. Gas and food prices are on the rise and there is no end in sight.

    Do you just walk away from your home if you are not able to keep up with the payments at this rate? Or can you reapply for a 2nd modification.

    At this rate, I would assume that Bank of America doesn’t really want to help keep people in their homes. Are other financial instututions approving an in house at such high rates?

    Posted on April 14th, 2012 at 6:00 am

  3. Mrs bowe Said,

    I have been waiting since Aug for approval on my global modification. Still no answer

    Posted on December 1st, 2012 at 11:16 pm

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