Do you know how to calculate your income to qualify for aloan modification?  This is tricky, but it is also one of the most important parts of the entire approval process.  The Federal Treasury Department mandates an official formula be used on each and every homeowner who applies for a loan workout-but if you don’t understand how this is calculated, chances are you will get it wrong.  In fact, this is the #1 reason for denials!

Official FormulaIf only there were some way for homeowners to know ahead of time just how to calculate their income so they would be able to report the right amount on their application.  Guidelines state that the Gross Monthly Income be used to determine the borrowers:

  1. Debt to income Ratio
  2. New Target Payment
  3. Waterfall Method of Modification

The official formula that banks use for loan modification qualifying takes into consideration your household gross monthly income, and the goal is to modify your current payment so that it will represent 31% of that income figure.  However, there are standard methods that must be used to change the terms-and so if you don’t report just the right amount of income you will fail the formula.  The Waterfall Method uses rate reduction, loan terms and principal reduction to try to arrive

Budget Requirements Displayed

at the new modified payment-so it is critical that your income pass the Waterfall.

This official formula is published by the federal Treasury Dept. and it is used on every application, so it makes sense to use this same formula on your own income.  This can be confusing to figure out for most borrowers, but you can use a program that mimics this same formula and that will automatically calculate your own specific income requirements.  The Loan Mod Calculator was specifically designed for homeowner use, and provides you with your own calculations for income, expenses, and assets and shows you PASS or FAIL, allowing you to make any necessary adjustments before you submit your application.

Get the real answers you need-including income requirements-use the #1 selling resource for homeowners, The Complete Loan Modification Guide kit and Loan Mod Calculator.  This powerful program mimics the guidelines, and instantly computes your own specific budget requirements for you.  Avoid mistakes and frustration, get it right the first time.  Visit MyLoanModificationCenter.com

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