How to calculate your income for note modifications using the methods of banks

It is important to understand how to calculate your income using the same method as the banks will. To clarify there are not 4 weeks in a month! There are 52 weeks in a 12 month calendar year. This makes the average month contain 4.34 weeks. To more accurately compute your monthly gross income you must perform the following calculations:

W2 Wage Earner Example the Paycheck Check:

Pay date 9/21/2009
Pay period beginning 8/03
Pay period ending 8/17

Pay check amount $1404.84
Year-to-Date Gross Income $35,237
Year-to-Date Net Income $26,075.38

To determine your monthly income from your most recent paystub you must first find the pay period ending date. This date is NOT the pay check date. The pay period is usually expressed over a two week period and will be shown in a similar format as shown above.

You now must determine how many months to the percentage of the current month the Year-to-Date Income is has accounted for.

In the pay period expressed above you will perform the following calculations

The pay period ended in September 17. To determine the percentage of September accounted for you take the pay period ending date and divide by 30 (the average days in a month) shown as 17/30 = .56666. This means the pay period end date was .56666 of the month of September. You now take this portion of the month of September (.56666) and add it to the amount of full months already accounted for the year thus far (January through August) which is 8 full months. You now have your year to date months worked as 8.56666

To determine your actual Year-to-Date monthly income you take your full Gross (pre taxed income) of $35,237 and divide this amount by the amount of months to the fraction of the current month determined to be 8.5666. This is expressed as $35,237/8.56666 = $4113.27

Monthly Income calculations Summarized from info above

17/30 = .56666
.56666 + 8 (full months already passed) = 8.56666
$35,237/8.56666 = 4113.27

In preforming your own loan modification it is important to understand how to compute yur income correctly, as it will be needed in creation your financial budget and proposed payment.

Things you must know about loan modifications

What you need to know about loan modification

Loan modifications may not have been applicable to all loans, because most big lenders sell the loans to Fannie Mae, Freddie Mac or Ginnie Mae. These government-sponsored enterprises group the mortgages that they acquire and sell them to investors. In such cases, a loan modification was not always an option. However, now that the federal government has taken over Fannie Mae and Freddie Mac, you can expect more lenders to offer loan modifications. If a loan cannot be modified, the client has the option of applying for a “streamlined” refinance with the same loan servicer. It proves advantageous in using the current loan servicer, as homeowners can reduce the amount of paperwork, costs, and delays. Loan modifications are easier to complete in cases such as these, but are not limited to these alone:

• The Homeowner has fallen behind on the mortgage payments

• The Homeowner is financially affected because the principal loan amount is higher than the current appraised value of the home.

• The Homeowner currently has an interest only loan(s)

• The Homeowner is in an adjustable rate mortgage that either have not yet begun to adjusted, or are in their adjustment period.

• The Homeowner is in A Minimum Payment Adjustable Rate Mortgage called an Option Arm.

• Income has changed or expenses have increased

If you have one or more of these acceptable hardships then your chances of successfully completing a loan modification is greatly increased. Contact JNR Associates for a free analysis!

RGJ.COM acknowledges not all Nevada Loan Modification companies are scams

Finally the local media has taken a step in the right direction to point out that loan modifications are not a scam.  Maybe they will start to shine some light on the positive side of them.

Read Reno Gazette Journal article here