Debt to Income Ratio for Loan Modification with Wells Fargo

[Karis]

Hi,

I'm new on this forum. Trying to do a loan modification with Wells Fargo. What I am trying to figure out is after I deduct my expenses including my present loan payment from my gross monthly income, should I break even, or have a small plus of under $100 left? My gross income is $1693 & I have figured my expenses including present mortgage payment at $1692. I can deduct my electric as my husband pays it and he is not on my loan.That would give me a surplus of $135. My present mortgage payment with Wells Fargo is $679.69 (includes taxes & ins.) This being said my mortgage payment is more than 31% of my gross income and I think I can apply for the Making Home Affordable Program. My new payment should be $524.83. That would save me $154.86 a month I tried to refigure my debt to income using this figure of $524.83 and it would leave me $155.00 left over. I can deduct $135. more as my husband pays the electric bill and is not on my loan.This would give me $290. left after modification. What should the amount left over at the end of the month be?. I guess what I am trying to find out is when you do the worksheet income to debt showing your present mortgage payment, should you break even,have a minus or small plus? When you try to figure your new worksheet income to debt, should you have $150.00 , $200. more or less left over? I don't have a lot of income to work with and expenses don't help, have you heard if Wells Fargo ever goes below the 31% of gross income to figure a new mortgage payment?
Thanks

Karis

[Cat Damiano]

Hi Karis,


Welcome to the forum and thank you for joining........


For the HAMP modification they will be working to get the payment down to within 31 percent of your gross household income using a series of waterfall steps to do so as that is what is deemed as an affordable payment for the program. If the back end debt ratio is over 55 percent, they will recommend counseling to work on the budget with you. You can try putting the required figures into the following thread so that Michael can take a look and let you know if you qualify, you can also ask the question about the surplus there as well.

Find out Now If you even QUALIFY for a Loan Workout Solution. Post Your Situation


Here are the steps taken for the modification;


Step 1: Capitalization

In the first step, the servicer capitalizes accrued interest, out-of-pocket escrow advances to third parties, and any required escrow advances that will be paid to third parties by the servicer during the TPP.

Step 2: Interest Rate Reduction

In the second step, the servicer reduces the starting interest rate in increments of 0.125 percent to get as close as possible to the target monthly mortgage payment ratio. The interest rate floor is 2.0 percent. The initial interest rate would be fixed for the first five years then increase by 1 percent in year 6 and another 1 percent in year 7. For the remainder of the term the rate will be fixed at the prime market rate at the inception of the permanent loan modification.

Step 3: Term Extension

If necessary, in the third step the servicer extends the term and re-amortizes the mortgage loan by up to 480 months from the Modification Effective Date to achieve the target monthly mortgage payment ratio.

Step 4: Principal Forbearance

If necessary, the servicer will provide for principal forbearance to achieve the target monthly mortgage payment ratio. The principal forbearance amount is non-interest bearing and non-amortizing.

The amount of principal forbearance will result in a balloon payment fully due and payable upon the earliest of the borrower’s transfer of the property, payoff of the interest bearing UPB, or at maturity of the mortgage loan.

There is no requirement to forgive principal under HAMP.

[Karis]

Hi Michael,
Starting the loan modification progess with Wells Fargo & was refereed for analysis. I'm not clear on how much you should have left over or maybe 0 or maybe a small negative at the end of the month on the income minus expenses worksheet that will show your present monthly payment Also when you figure what you would have left over at the end of the month using your new monthly payment (31% of gross income), could you have approx $150.00 left or should you have more? My income is $1693. My present monthly payment with Wells Fargo is $679.69 which includes taxes & ins. My expenses (Credit Cards, Personal Loan Car Loan, Car Ins. Food, Gas Utilities, ,Satellite,Phone
came to a total of $1692.44. I did not include Health Ins. This show no real plus or minus at the end of the month using present mortgage payment. Based on the new loan payment 31% of $1693. which is $524.83 plus my expenses I would have $154.86 Is this enough. If not I could deduct the electric bill of $135.00 as my husband pays it and he is not on my loan with Wells Fargo and that would increase to $289.86 left over . Would that be enough left each month Also if I understand it, Making Home Affordable will not reduce mortgage payment below 31% of Gross Income. and I would have to see if Wells Fargo has any other programs. Maybe I should just try & get the $154.86 reduction with Making Home Affordable.
Thanks,
Karis

[Cat Damiano]

Hi Karis,


You would have to click on the link below and that will take you to the thread to post the figures that are required so that Michael can take a look and also ask these questions;

Find out Now If you even QUALIFY for a Loan Workout Solution. Post Your Situation