A critical part of applying and qualifying for a Chase loan modification is being able to meet the debt ratio requirement. Never heard of this before? Well, when it comes to loan review, this calculation is one of the most important things the bank will look at. So, just 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 Chase loan modification will mean that you complete a financial statement detailing your own unique household monthly gross income and monthly expenses. Then the bank will review this statement and based on how you complete it, you will either be approved or denied. So, it is really important 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:
Chase Loan Modification Debt Ratio Calculation:
Total monthly expenses DIVIDED by total monthly Gross income = debt ratio percentage
For Example: Total monthly expenses equal $2600 and total monthly gross income equal $5000
2600 divided by 5000 = 52% That would be your own debt ratio. So what is required for approval for a Chase ? Well, that depends on the loan workout program you are requesting-here are a couple of options.
The Chase 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 of the loan’s principal balance deferred or even forgiven.
The first approval guideline under Chase loan modification with 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.
One other loan modification option could be one of Chase’s proprietary or in house plans. These are custom tailored for each borrower and these programs 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 federal HAMP option, you could be offered one of these other plans.
INSIDER TIP: Make certain you know how to calculate and meet the Chase 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. You can save hours of time and frustration. 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.
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