One of the major keys to a loan modification approval is the household budget. For many homeowners. This can be a challenging and painful process. However, the process of going through a foreclosure can be a more painful process. The process of prioritizing a household budget has many benefits. First, thehomeowners gain a clear picture of their current financial situation which in turn leads to better financial decisions.
Second, the homeowners is provided an ordered framework for each major budget item which in turn gives the homeowner the well needed focus to reduce tension and stress in the home. Third, the homeowner has the opportunity to cut our wasteful spending and this effort alone provides homeowners the discipline to reduce debt and increase savings in the home.
If the lender observes changes in the homeowners spending habits then this increases the homeowners opportunity of a loan modification approval. The mortgage needs to be the first priority of homeowners. Utility bills then become the second priority. Grocery becomes the third priority which leads to the last major priority, credit cards. Here the homeowner needs to begin negotiations with credit card providers to receive a suspension in payments for at least three months.
If the credit card providers are unwilling to negotiate then the homeowner has a hard decisionto make. The homeowner must now decide whether to charge off credit cards and accept theconsequence of negative items being reported on their credit report and redistribute money from credit cards to mortgage payments to prevent foreclosure. The lenders views this gesture on the homeowners part as a serious attempt to make mortgage payments once their loan has been modified.
Cable and cell phone payments may need to be suspended for at least three to four months in order to get a loan modification approval. Homeowners at this point need to write a statement to include in the loan modification package of their intention to charge off credit cards and stop making cable and cell phone payments. Families learn a great deal about themselves during the process of prioritizing a household budget and this increases loan modification approvals.
