Mortgage Modification Tips On Income

Thousands of people submit mortgage modifications applications every day with errors. Significant errors. Errors in the basis for the whole application – the gross household income! Since the mortgage modification is, for many, the best hope of keeping their homes and since the income section is the very foundation of the application, this is a big problem indeed. dozens of people review their applications with me each week prior to submitting to the bank. The majority make errors in the Income Section of the application. They get their own income wrong! So, let me tell you what I tell them:

1. Include the correct income. Include the income from the folks signed on the loan. All other household income need only be included if you choose. Even if your spouse or partner or parents or kids contribute to the household income…just include their income if you need it to get your ratios right.

2. Calculate the income correctly. Sounds unbelievable but many folks actually calculate their own income incorrectly. It’s not uncommon to have clients using net instead of gross, mixing bi-weekly with semi-monthly paydays for calculations and using prior year’s W-2 instead of more current proof. I recommend writing your calculations on the pay proof itself. For example, write “This is a weekly pay check. The gross amount of this check X 52 and divided by 12 is how I calculated the monthly income used in my budget”. Sounds way too basic? Believe me, it’s not. Basic is good.

3. Document Income well. Go beyond what is normal or expected. Think of it as an actual submittal to underwriting – becasue it will be, eventually. Include notary witness of your self-employed P&L. Include annual award letters AND check stubs for SSI and EDD income. Attach Attestation Statements (signed and notarized) on bank statements when used to document cash earnings, etc. These measures are beyond what the bank requires but will serve you well. Think of it as a competition – your application has to stand out and be bullet-proof to win the race to the narrow “Approved” finish line.

4. Augment household income, if you must. If there’s too little income to qualify for the mortgage modification then you have to augment your income. Don’t bother trying to apply if your ratios are not right. That’s wasting your own time. Some ways people are adding to their household income to qualify include: If self-employed, use your best period!! Renting out a room Renting the garage Getting a 2nd job Get adult Children to pay rent Get parents pay for room, driving, etc. Get a Contribution Letter from relative or friend

5. Reduce your income, if you must. That’s right, some people fail to qualify because their mortgage payment is too small a percentage of their household income. They actually have to reduce their income! Some ways my clients have reduced their incomes in order to qualify include: Remove income from any household member not on the loan Scrutinize untraceable income – like tips Remove “at risk” income – like bonuses based on company performance Scrutinize expense items on self-employed P&L

Take this section seriously. It’s the basis of your application. Get it right and you’re off to a good start!

Need help actually getting Mortgage Modification? Visit Rockwood’s site about DIY Loan Modification at Home Loan Modification