If you are dreading a possible foreclosure because you cannot afford to pay the mortgage, a loan modification can save you. A loan modification is also a good solution for those homeowners who cannot refinance.
Modifying a loan restructures the terms of the existing mortgage without refinancing. The terms that can be modified are the amount of monthly payments, length of loan and the principle to fit the current financial status of the borrower.
Anyone can get a loan modification as long as they prove their genuine hardship in paying the mortgage. Each lender will have a different set of modification guidelines and are currently adopting new guidelines to support the increase in application for loan modifications. A lender could also allow a loan modification even if the borrower can pay the mortgage on time. Eminent job loss, medical issues or income reduction are other reasons that lenders consider in allowing a loan modification.
To avoid being rejected when applying for a loan modification, make sure that you have all the necessary documents needed, present your budget in a proper way and show proof of your genuine hardship.