Applying for a modification of a loan agreement is an easy process. It only requires the lendee to make a statement that he is having difficulty in paying the loan, and to present certain documents verifying his incapacity. However, it becomes a difficult one when both the lender and the borrower are pushing their own terms and conditions for modification. It also becomes even more challenging when a lender may have more than one borrower.
If all of them will apply, it may take time to know whose application will be approved.
To apply for a Long Island loan modification, a borrower must do the following:
1. Know if he is qualified
Before starting to do anything, he must know if he is qualified for a Long Island loan modification. Most lenders require that he must have a steady flow of income and sufficient budget to qualify. This is very important because even if he shows concretely that he is indeed financially incapable of paying the loan, his application will not be accepted because he is not qualified to do so.
While some lenders only require the presence of stable income and sufficient budget, there are some who impose strict requirements in order to protect their interests. These strict requirements are the following:
- Presence of either a loss of income, an increase in expenses, or verifiable bankruptcy.
- Having a steady flow of income other than unemployment benefits.
- Owning properties which can be used as collateral in case he fails to pay the loan despite the modification.
- Not receiving a modification for a previously incurred loan.
2. Make a hardship letter
A hardship letter is a document made by the borrower stating his current financial condition and the surrounding circumstances that makes him incapable to pay the loan. As part of the requirements for a Long Island loan modification, the letter must show the following:
- A statement saying that he cannot pay the loan on its due date.
- A specific reason why he experienced either an increase in expenses or a decrease in income. Some examples of these reasons include unemployment, divorce, death of a family member, or a serious illness.
- The steps that he will take to manage his financial crisis.
3. Plan a course of action to manage the situation
After making a hardship letter,
the borrower must now think of a plan on how he can manage his financial condition. This includes reducing his spending on luxurious and unnecessary items, looking for other sources of funding to pay the loan, and saving a part of his budget for payment. This is important in the process because it will show that despite being unable to pay the loan, the borrower does everything he can to at least try.
4. Talk to the lender
The borrower must talk to the lender after his application is being processed. He must explain to him that he cannot pay the loan in time because of certain circumstances, and that he is doing everything to manage his available resources. Communication is essential to prevent the lender from thinking that he is not doing anything to lessen his burden.
5. Wait for the application to
After submitting all the required documents for a Long Island loan modification, he must wait for the results of his application. While waiting for the approval, it is best for the borrower to look for alternative sources of funding in case his application ends up disapproved. It is also best for him to think of modifications to offer if his application is approved.
As soon as the application is approved, the borrower should proceed with saving money and starting to pay the loan.