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Once you’ve received your loan modification application from your lender it’s time to do your home work. What do we mean by “your homework?” We mean simply the collecting and ascertaining of your income and expenses in order to successfully complete your loan modification application.

In brief – think back to the documentation you needed to apply for your loan, you’ll need essentially that information in order to complete your loan modification application.

A typical loan modification financial worksheet will request the following information:

  • Contact Information
  • Property information including estimated value
  • Current monthly income
  • Additional income (not wages) such as social security, child support, welfare, etc.
  • Estimated value of all assets
  • Home
  • Other real estate
  • Checking accounts
  • Savings
  • IRAs
  • 401(k) accounts
  • Stocks, Bonds, CDs
  • Auto 1, Auto 2, Boats, RVs, etc.
  • Other investments
  • Liabilities (monthly payments and balance owed)
  • Alimony – Child support
  • Dependent care / child care / tuition
  • Cable /cell phone
  • Other mortgage(s) / rent
  • Personal loan(s) / credit cards
  • Medical expenses
  • HOA fees / taxes / insurance
  • Automobiles
  • Tax liens
  • Utilities
  • Auto expense (gas / maintenance)

Collect the following:

  • Two most-recent months paystubs for you and your spouse (if you both work)
  • Three months bank statements for your primary checking and savings accounts
  • Last year’s W2 or 1099s
  • Most recent statement for any other types of income – social security, disability, etc.
  • Most recent mortgage statement
  • Most recent home equity line statement or 2nd mortgage as appropriate
  • Most recent credit card statements
  • Most recent student loan statements
  • Most recent car loan statement(s)
  • Most recent home owners’ association statement as applicable
  • Most recent statement for other debts as applicable

Keep all of this information in your notebook or a separate folder. You’ll be using this information a lot so keep it handy.

Now, we need to get a sense of your monthly expenses that aren’t a part of the above debts. Using either your past banks statements or your best accounting, estimate the following monthly expenses:

  • Food costs (dining in and eating out)
  • Clothing costs (per person)
  • Utilities cost (including phone, cable, electricity, water, gas, trash and cell phones)
  • Daycare or private school costs
  • Assisted living costs
  • Health insurance costs not automatically deducted out of your paycheck
  • Gym memberships or other membership charges

Once you’ve collected all of that information it’s time to complete your monthly expense worksheet. This monthly expense worksheet is going to determine your debt-to-income ratio. This is the single most important item in determining your eligibility in getting a loan modification.

Tip: It’s never recommended to try to calculate this information while on the phone with a bank representative. It is too important to do off the top of your head. Set aside some time to sit down with some quiet time with you and your spouse and go through the numbers carefully.

In the next post in the series we’ll go in to qualifying for a loan modification. For now, if you’d like a sample monthly expense worksheet you can download one for free by joining Blown Mortgage’s Loan Modification Tips mailing list.

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