Can You Have Savings & Still Qualify for a Mortgage Modification?

Financial Hardship

To qualify for a mortgage modification, you must prove to your lender that a financial hardship makes it impossible for you to afford your current payments. This hardship can be anything from a job loss to a reduction in working hours, to a long illness that has kept you from reporting to your job. If you have a significant amount of savings in a bank account, though, your mortgage lender may be wary of approving your modification request. This can be especially true if the savings you've built up are large enough to cover your mortgage loan payments for half a year or longer.

To prove that your savings aren't enough to cover your mortgage payments, you'll need to give your lender additional evidence. You might have other significant expenses, such as high credit card bills or mortgage payments on a second home. These will quickly eat away at your savings if a financial hardship has dramatically cut your gross monthly income. If you can show your lender that your savings, however significant, won't cover all of your bills, you'll increase your chances of qualifying for a loan modification.

You might convince your lender that you can't afford your monthly mortgage payments -- even with your savings -- if you can prove that your financial hardship is long-term. If you've lost your job, you might bolster your case for a mortgage modification if you can bring stats showing that few companies in your particular industry are hiring. If you've suffered a long illness, you can provide documents from your doctor stating that you won't be able to return to work for several months. These long-term hardships, you can argue, will quickly eat away at whatever savings you have.

No matter how much money you have in savings, you'll have to craft a strong case to convince your lender to approve a modification. This involves writing a clear hardship letter. Detail the exact reasons why you can no longer afford your loan payment. Send photocopies of financial documents proving that while your monthly debt obligations haven't lessened, your gross monthly income has. These documents can include your credit card bills, bank savings and checking account statements, your last two paycheck stubs and most recent two years' worth of federal income tax returns.