When Applying for Loan Mod, is There a Better Chance of Approval If Your Income is Less Than Expenses?

[Mariel]

Good Evening and thank you for taking the time to answer some of our questions. When applying for a loan modification, do you have more chances of being approve if you show a deficit (If your income is less than your expenses), or a surplus?

[Paul M.]

The lender bases its decision on whether it will make more money by allowing the modification or foreclosing. Thus, the lender wants to know that you can pay the agreed amount every month. Thus, they want to see that you have a surplus every month out of which you will pay your mortgage. Keeping that in mind, they also don't want you having any extra cash on hand, so they will want all of that surplus to go to your monthly payment. This is a tricky situation, you want to show them you are barely able to make the amount they need and not a dime more. The problem is only they know the exact monthly payment they need to make modification more profitable than foreclosure.

- Paul