5 Things You Can Do to Speed Up Loan Modification Processing

Depending on your reason for seeking loan modification processing, not all strategies to expedite the application will work in your favor. Some borrowers need to modify to avoid default. Others are simply looking to get a better deal. Depending on your priorities, consider the following strategies and how they will help you reach your ultimate goals.

#1 Submit a Hardship Letter

If you feel you will face default without modification, the fastest way to get approved for your new terms is to submit proof of a financial hardship. You will need to show you paid your loan before the hardship occurred. You will also need to show the hardship is outside of your control and will continue indefinitely. Examples include a job loss or illness. A lender will save money by modifying over allowing you to default, and they will typically work fast to make sure this happens.

#2 Pay Down a Lump Sum

Borrowers who are looking to secure better terms on their loan can try paying down a lump sum of the balance. By doing so, you can shorten your loan terms. Lenders tend to favor shorter loans because they recover funds quickly. This in addition to the fact you are offering a large chunk of cash quickly will typically entice a lender to move through modification quickly with you.

#3 Offer Additional Collateral

Another way to tip the scales in the lender's favor in order to gain fast approval is to offer up additional collateral. In the case of a home loan, you will typically already be using your home as collateral on the loan. You can add another asset, like a car or business, to the loan in order to provide the lender greater assurance against default. This is particularly important if you are looking to lower your monthly payments or extend your loan, which can be risky for a lender. Giving them additional protection against the chance of you defaulting will entice them to approve your requests faster.

#4 Accept Less Favorable Terms

Making a down payment or offering additional collateral are only two examples of the terms you can provide in a lender's favor. You can also opt for a higher interest rate or higher fees if you miss a payment. Ultimately, anything you can do to allow a lender more protection on the loan will improve processing. However, if the main goal of the modification is to gain better terms, this can be a tricky road to walk. Make sure you do not compromise on terms that are important to your priorities.

#5 Ensure your Application is Accurate

Above all else, an accurate application will speed up any loan modification process. The more verification the lender has to do, the longer the funding will take. Provide stated income from your employer, provide a copy of any credit report required, and ensure all information on the application is correct. If you have to fix an application error, you may have to start at square one, submitting a completely new set of forms.