Loan Modification

Loan Modifications are becoming more and more popular. One of the main reasons is that having a low credit score, and a high loan to value will actually help you to become approved.

Due to major shifts in the qualifying criteria for home loans, most homeowners are unable to refinance. Generally the minimum guidelines for a refinance are

• Loan to value below 80%
• Credit scores above 620
• Proven income
• Debt to income ratio below 45%

For a loan modification, the criteria is almost completely the opposite. The reason for this is that a foreclosure is a very expensive process.  The more likely you are to default on your loan, the more likely your loan modification will be approved.

A bank will lose future profits on a loan modificaiton, but in most cases will not lose any of their initial investment.