A Bank of America loan modification requires debt to income budget calculations that can be tough to figure out. This is one of the most important parts of getting approved for a loan mod, so learning how the requirements work is important if you want to have the best chance of getting approved. Here is some easy to understand details about how to figure your own debt to income ratio and prepare an acceptable budget.
The Bank of America debt to income budget requirements are set forth by the federal government under the HAMP program. This means that every homeowner who applies is subject to the same requirements, and you must pass this first approval trigger before you can move on with your loan modification. You will have to complete a loan mod application and give a detailed accounting of your monthly income, expenses and bank balances. This information will be used to determine if your debt ratio is acceptable-it is a good idea to run your figures through the loan modification software calculator to make sure that your budget is passing the requirements.
There are actually two debt to income budget requirements-one is called the
housing ratio and uses just your monthly mortgage payment, property taxes and insurance and any HOA dues. The acceptable housing debt ratio must exceed 31% and there is no maximum percentage-it can be anything over the 31%. If your current mortgage expenses is less than this figure, then you will not qualify for HAMP, you may be offered some other type of loan workout plan offered by Bank of America outside of the federal plan.
The simple formula for figuring your housing debt to income ratio is:
Total of monthly mortgage payment, property taxes, homeowners insurance, HOA dues DIVIDED by the Household Gross Monthly Income
The second debt to income budget requirement is called the back end ratio, and this figure totals ALL of your monthly expenses-including the housing, utilities, car payments, etc divided by the gross monthly income. This figure will show the bank how unaffordable your current mortgage really is, and you may also be required to attend credit counseling if this figure is over 55%.
This may all sound confusing and difficult to figure out by yourself, but it is really an important part of the entire Bank of America loan modification process so you need to know if you are passing the debt ratio or not. You can use the loan modification software calculator to figure it all for you automatically, and also see just where you may need to make adjustments to your budget in order to pass these approval guidelines. You can then use the sample monthly budget provided by the calculator to complete your final application and greatly increase your chances for approval.
Get help with your Bank of America loan modification application-use the #1 resource for homeowners, The Complete Loan Modification Guide kit and
loan modification software calculator. The kit provides step by step directions, required forms and the software calculator generates your very own sample monthly budget showing debt ratio and other critical approval triggers. Avoid mistakes and increase your chances for approval-visit MyLoanModificationCenter.com today.