Many are shocked to learn when their loan modification has been denied. In some cases, it may be assumed that something in your credit or income was the source of the issue, but it could be a simpler reason. In fact, there are many different reasons a loan modification can be denied due to small mistakes in the paperwork or process.

Failure to Disclose Certain Information

Not only is lying on a loan modification fraud, it doesn’t play in your favor. Loan companies have a lot of experience working with people undergoing financial hardship. By being honest, you can get a better modification for your circumstances in addition to being approved.

Failure to Gather All Information Ahead

Knowing the full cost of a loan modification ahead of time can pay off. Before signing anything, you need to fully understand the new interest rate, how much the mortgage will be each month, and so on. Not factoring this information in can lead to the same position you were in to need the loan modification.

Negative Effect of Too Many Credit Checks

Every time your credit is checked, it influences your score. While having a few checks here and there will have little to no effect on the score, having many checks while working out your recovery plan can have a big impact. Be sure to plan ahead to have as few individual checks as possible.

Not Exploring Lender Options

Every lender is different. Depending on the lender, you could get a better rate to fit your financial needs. Before deciding on sticking with your own bank or lender, shop around to see if another company will approve you more easily and offer the assistance you need.

Failure to Provide a Hardship Letter

Financial hardship happens. While it is an understandable spot to be in, you still need to provide a letter that states your case. This helps give the lender an idea of what your financial situation is and why you need the modification. Not only does it better inform a lender, but it places you in a better spot to have your financial needs weighed in.

Looking to modify your loan? We can help. Contact our team of attorneys at Reinherz & Reinherz today for more information.

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