The most common reason homeowners get turned down for a workout with their lender is: “income too low for loan modification.” It sounds backwards in that if the borrower’s income were higher, they wouldn’t be asking for assistance in the first place, but turn downs citing income too low for loan modification are unfortunately quite common. The best way to overcome this issue is to show more income. Here are some options and suggestions:
Overcome the Income Too Low for Loan Modification Issue:
1. Take on a Renter. A renter doesn’t have to be a stranger, it can be a family member, friend, or even close relative like a son or daughter or parent. Many homeowners have a source of “rental income” right in front of them, they’re just not taking advantage of it. So start charging those kids rent, and overcome income too low for loan modification.
2. Overtime or a Part Time Job. Many homeowners work a job which may offer overtime periodically, make sure you’re working overtime any chance you get. Oftentimes employers are even sympathetic to loan modification issues and can help with extra overtime for a while during the qualification process. It certainly doesn’t hurt to ask. A part time job is another option, even if it’s not much, every bit helps.
3. Get Creative. Income can come from lots of places. It certainly doesn’t have to be the traditional regular payroll check, lenders will consider self-employment income, home-based business income and other sources of income. Additionally, if a friend or family member is able to help you monetarily, turn that assistance into a job and provide them with some service in return. You’ve then taken a “gift” which lenders don’t consider “income” into a job which is considered income.
Loan Modification Income Presentation
When submitting “non-traditional” income sources to your lender for consideration, proper documentation can be the difference between getting the loan modification or getting turned down due to income too low for loan modification. Here are some recommendations to get your income submitted and considered for your loan modification:
1. Income Must Be Documented. Whether it is income from a lease to a family member (actual lease or letter from the person detailing how much they pay), or a non-traditional part time job (invoices, etc.), the mortgage company will NOT just take your word for it. You have to provide them with documents backing up the income you’re offering up.
2. Organization Improves Your Chances. If you want to even further improve your chances, any kind of financial statement to accompany your invoices will be important. It doesn’t have to be anything elaborate, a simple “Profit and Loss” statement will generally suffice, especially if it’s accompanied by bank statements backing up the income shown.
3. Bank Statements Tracking the Money. What can really boost your chances of getting exactly what you want from your lender is bank statements. If you can provide them with invoices, profit and loss statements, as well as bank statements all showing consistent income, the lender will almost certainly have no problem considering that income for your loan modification.
Preparing the Loan Modification Income Documents
Most of us aren’t wizards with financial statements, and in fact have probably never prepared an invoice or profit and loss statement before in our lives. Don’t let this discourage you however. Templates or Samples for all these documents are available online for free. Simply download the form (or recreate it on your computer) and plug in the appropriate numbers for your business and necessary income. The good news is the mortgage company isn’t looking for anything terribly detailed, just some document they can use to justify that they “verified” your income, and overcome the issue of income too low for loan modification.
California Loan Modification Attorneys
McFarlin LLP attorneys handle all aspects of loan modification for borrowers in Orange County, Los Angeles, San Diego, Riverside, Anaheim, Costa Mesa, Newport Beach, and throughout California. Our attorneys are available to provide you with honest reliable advice at our Irvine office or over the phone. With a matter as important as loan modification and foreclosure, it is a very good idea to consider hiring a qualified California loan modification attorney to represent you and protect your interests.