Writing an effective letter of financial hardship is one of the most important thing homeowners hoping for mortgage refinancing or modification approval can do. Often times, a homeowner is denied simply because their letter was not correctly written. Here, is how to write an effective letter of financial hardship for mortgage refinancing or modification.

So, What is a Hardship Letter?
A letter of financial hardship explains to the lender the problems you are having financially. This should show that with your current debts and income, paying the mortgage is becoming harder, if not impossible. Convince the lender through this letter that after you are approved for a home loan modification, you will be able to actually pay the new home loan. This is very important because if a lender thinks for any reason you can not pay, they will not approve you.

What should be Included in this letter?
Make sure you are completely upfront and honest on your hardship letter and application for mortgage modification. If possible, include any proof of your debts, income, and savings. Mortgage lenders and banks will be thoroughly looking into income and debt claims. If they are unable to verify your income or debts, you will be denied. Always be truthful because if you are caught outright lying, that lender will never approve you again.

In this letter stating your financial hardships, make sure to explain your financial situation, and the reasons that you have so much debt. Also, include what steps you have taken or will be taking, to prevent these problems from happening again in the future.

Especially these days, documents will be needed to verify income, and prove that you are a homeowner facing financial hardships. Proof can include things such as, hospital bills, bank statements, all debts, unemployment, and anything which supports your claim of barely or not being able to pay your home loan payments.

Make sure that once you get approved for mortgage modification, that you are able to get your finances in order so this does not happen again. Getting another modification on your home loan will be much harder than the first one.

Take your time, write a proper letter, include the correct documents, and take action.

-M Petrone

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