For struggling homeowners a home loan modification can be an optimal choice to avoid foreclosure. Loan modification can be a grueling process, but a properly written hardship letter can improve a homeowner's chance of getting their application approved. A hardship letter explains your financial situation and why you need help.
The most productive and optimal hardship letters are short and truthful. They don't divulge too many details, but still explain the problem and offer a solution. Saying something as simple as "due to unforeseen expanses and less hours at my job, I am finding it hard to make my payments on time," may be all that you need to get what you want. Lenders know how hard it is right now and don't need endless explanations about your troubles.
If you are still not sure how to write a proper hardship letter, here are a few simple guidelines.
- Keep it short, but never keep it vague. Include all necessary information and documents such as unemployment notices; medical receipts; death certificates; etc.
- Write with enough emotions to convey your situation.
- Tell your lender what you want, specifically a reduced interest rate, longer loan term.
- Include reasons for failure to make payments or important dates that coincide with your troubles.
- Show a willingness to work with your lender to find a solution that suits both you and your lender.
- Always be polite. Thank the lender for their time.
- Include current contact information and other important personal information.
Here are a few things you should never include in your hardship letter.
- Don't include anything that will make you look irresponsible and a spendthrift.
- Only include information which is related to your case.
- Don't threaten the lender; don't say something like you won't make any payments. Banks don't respond well to threats.
Although a proper hardship letter is a good step toward achieving your home loan modified, there are more steps and pitfalls that homeowners can fall in to. Homeowners need to learn the subject in and out, know the vocabulary that shows you know what you are talking about so that the lender will not take advantage of you again.