These loan modification examples reflect how the modification of your loan can result in a much more affordable mortgage payment!

The following are loan modification examples that show the results of an affordable mortgage modification plan. The results of a loan modification can really help make your mortgage affordable. Please keep in mind, these are only examples and are not intended to indicate the exact results you should expect if you qualify for a modification of your mortgage. Every case is unique. To have your situation reviewed, please contact a loan modification expert. The information required for a personal analysis can be found in our sample loan modification agreement.

GMI = Gross Monthly Income
PITIA = Principal, Interest, Taxes, Insurance and Association Fees
DTI = Debt to Income Ratio

Example 1: Rate reduction to achieve 31% DTI

GMI $ 4000.00
31% GMI (Target Monthly Payment) $ 1240.00
Loan $200,000 @ 7.5% 30 years $ 1398.43/month

Taxes and Insurance $ 250.00/month

PITIA $ 1698.43/month

Modify rate to 4% to achieve a DTI of appx 31%

Modified Rate to 4%: $ 954.83/month

Taxes and Insurance: $ 250.00/month
New Payment $ 1204.83/month
Savings $ 493.60/month

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Example 2: Rate reduction and extending term of loan to 35 years to achieve 31% DTI

GMI $ 3000.00
31% GMI (Target Monthly Payment) $ 930.00
Loan $200,000 @ 7.5% 30 years $ 1398.43/month

Taxes and Insurance $ 250.00/month

PITIA $ 1698.43/month

Modify rate to 2%. Modify term to 35 years to achieve a DTI of appx 31%

Modified Rate to 4%: $ 662.53/month

Taxes and Insurance: $ 250.00/month
New Payment $ 912.53/month
Savings $ 785.90/month

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Example 3: Rate reduction, term extension and principal forbearance to achieve 31% DTI

GMI $ 4500.00
31% GMI (Target Monthly Payment) $ 1395.00
Loan $450,000 @ 9.0% 30 years $ 3620.80/month

Taxes and Insurance $ 250.00/month

PITIA $ 3870.80/month

Modify rate to 2%. Modify term to 40 years

Modified Rate to 2% for 40 years: $ 1362.72/month

Taxes and Insurance: $ 250.00/month
New Payment $1612.72/month

Because lowering the rate to the maximum floor of 2% and extending the terms of the loan to 40 years still does not achieve the desired DTI of 31%, the lender, at its discretion can elect to forgive or forebear a portion of the principal to achieve the 31% DTI. In this example the lender elects to forbear $75,000 of the principal which would be due as a balloon payment at the end of the term of the loan or if the home were to be sold. This is not expected to be a common practice and would most likely be used in an instance where the borrows suffered a loss of income and the home suffered a sharp decrease in value.

Modified Rate to 2% for 40 years on calculated on $370,000 $ 1135.60/month

Taxes and Insurance: $ 250.00/month
New Payment $ 1385.60/month
Savings $ 2485.10/month