Self Employed and the Unemployed Are Among the Hardest to get a Loan Modification
If you are someone who is self employed you should have an idea of how hard it is to get approved for anything much less a getting approved for a large purchase. A lot of time the average self employed person has a hard time proving his or her income due to the different factors that might affect a stable and steady income stream. It can also be even more difficult for anyone who is unemployed, even if that person has had a stellar employment history and are suddenly out of work. Lenders do not want to deal with much risk at all. That are looking for the path with the least amount of risk when completing any kind of financial transaction. Even though some might argue and say that real estate is a safe and sound investment. That does have a lot of truth to it, but lenders also stand a chance of loosing large chunks of money depending on a particular piece of real estate if it should go to a foreclosure sale. In other words, they do stand a chance of losses, but usually not complete loss.
Anyone who is self-employed is usually looking for ways to minimize their income in order to try and save the most on their taxes and benefit by paying lower taxes by utilizing tax write offs. On the other hand, if you are showing a low adjusted gross income that may limit or eliminate anyone trying to get a major loan approved. So it become a “catch 22 situation. “ Another major obstacle for anyone who is self employed is that the way they are paid can be inconsistent and unpredictable, often leading them to have a cash flow issue if they don‘t budget right. So when a homeowner who happens to be self employed and they are wanting to do a loan modification which requires documented proof of income. This proof of income is not just for the last month or the last year, more commonly the proof needed is years of previous income. The unemployed has a different set of problems. They have no means of long term income unless they become employed again. Unemployment may last up to around 9 months, and if that is enough to cover the basic bills including their mortgage, then that may improve homeowners chances of being approved for a loan modification, but each case is weighed individually.
It is already a bit of a challenge for anyone to get modified much less the self employed, and even worst the unemployed. When someone is unemployed, the easiest time for that person to stand a good chance of being approved for any loan modification program is during the early stages of their unemployment when their potential benefits are still pretty large, and not fully consumed yet with claims. If your situation is one of the cases I described abobe, don’t give up on lowering your mortgage, because you still stand a chance.
