Before you start the process of a loan modification you need to have a handle on your current financial situation. I know that this seems scary to some people, but knowledge is power. When you have a firm grip on your finances it enables you to have a plan empowering you to take control of your financial destiny.
So your first step is to determine how much income you’re bringing in each month, and how much you’re paying in bills. You also need to look at where you can cut costs.
Next you need to contact your lender. Tell them what your situation is and have an idea what you need what you can do to help your situation.
You need to have some kind of an answer to your lender’s question of how you propose to pay off the loan eventually. You’re better off submitting an initial proposal. At least you’ve opened the door to negotiate with them.
If you think that your financial strain won’t last long, ask the lender for forbearance, or postponement of payments, for a couple of months until your finances recover.
If you have an adjustable rate mortgage that reset and you cannot meet the higher monthly payments, request a loan modification from the lender. They will request a complete financial history from you, detailing your income and monthly expenses. Ideally, you should have some cushion in your income to justify a loan modification, if they switched your mortgage to a fixed-rate mortgage. Show them that you can comfortably pay a fixed rate mortgage through extra income from a second job, and you are more likely to get a modification.
Finally any time you are making a decision like this it is always advisable to get a professional opinion from an accountant, credit counselor or bankruptcy lawyer.