Loan Modification: How to Figure Out Your Debt-to-Income Ratio

Everyone is looking for a way to lessen their monthly bills and loan modifications are an easy efficient way to do this. They are easy to obtain, as long as one qualifies, and they can help save someone’s home, car, and or clothing. Although loan modification can improve people’s lives greatly, it follows strict guidelines so financial procedures must be learned.

When trying to receive a loan modification, it is important to follow a simple equation: GI > TD * 2, where GI equivalent to one’s gross income and TD is the total debt of a person. If this equation is not correct when trying to figure out if one qualifies for a loan modification then it is quite likely that the person will be denied.

Gross income is simply the amount made before taxes. So, if a person makes $25.00 an hour and works 30 hours a week then they make $1,000 gross income. In order to qualify for the loan modification this $1,000 must be twice as great as the total debt. So, if they have a car payment of $150 a month, want a new loan modification of $350 a month, and have average weekly credit card bills of $100 a week then that person would not qualify for the loan modification. But if there was no credit card debt then it is likely that they would qualify for the loan modification. There are also factors that must be taken into account when considering the GI and TD of a loan modification.

The total debt of a person does not include necessities like food, electricity, or heat. The reason for this is because these can be cancelled at any time and, unless late payments are made, no debt is acquired. Also, in loan modifications the GI can also include things that help maintain bills such as alimony or child support. So, as long as the debt is half or less of the total amount received then one can expect to receive the loan modification.

Despite knowing this helpful hint, one must consult a professional when going after a loan modification. They can tell the person about intricate details and see if there are any unique options. For example, many may receive loan modifications if they were once ill and just got back to work.

People usually work 40 hours a week, 160 hours a month, and 1920 hours a year! When one realizes that they have to work nearly 2000 hours a year it is a must to try and save maximum profits. Loan modifications can be a strong contributor to this. So if one is applying for a loan modification they can apply the simple equation of GI > TD * 2. If it checks out then one can proceed and be confident that there time will not be wasted and they will receive the loan modification.