A loan modification program is designed to adjust the conditions of an existing loan in order to help a borrower get back on track with their monthly payments. Unfortunately, many people dont want to admit that they are in trouble with their loans or they believe there is no way to overcome the problems they are experiencing. The good news is that modification programs do exist and they truly can help some homeowners avoid foreclosure. These programs can seem a little intimidating at first, but after some brief learning most people understand the basics of the modification process.



Different from Refinancing





Modifying a mortgage is different from refinancing. A modification changes the terms of your existing loan without creating a new loan. Refinancing a mortgage typically replaces an existing loan with a new loan, which may have a different interest rate or loan term than the original mortgage. People facing a financial hardship may not qualify for a new mortgage through refinancing, but may improve their situation by modifying their existing mortgage.



If you are considering a loan modification program as a method of avoiding a foreclosure there are several steps to follow. One of the most important things you can do is understand the policies of your lender. Understanding these policies will help to ensure that you know what to expect and what you need to provide in order to qualify for a loan modification. Lenders usually require you to provide a hardship letter explaining your hardship situation. This letter should briefly outline why you need to modify your existing loan and how the changes will improve your ability to make your payments. This is a factual letter, don’t make it personal.



In addition to the hardship letter, most lenders will require additional documents, such as pay stubs, bank statements, and a monthly budget. Providing the requested documents in a timely manner allows the lender to make a faster decision regarding your modification request.



If you take the time to understand the entire process of the loan modification program and know what to expect from your lender then the entire process can be fairly simple. When dealing with your lender, it is important to stay in regular communication with them during the entire process. This will help to ensure that your request does not get overlooked or delayed.