What is a "Loan Modification"? What should you expect in pursuing a loan modification?

There has been 7 years since the housing market crash; the interim has produced a struggle for homeowners to stay in their homes, with few options to help aid in that process for themselves. The most effective method available, but not often the most successful is the "loan modification".

The "loan modification" is a restructuring of the mortgage payment, specifically with regard to reductions in principle interest and interest rate, with the process resulting in a very affordable monthly mortgage payment, based on your current financial status.

Essentially at the end of a successful modification your payment will be considerably lower, and your restructured mortgage will allow you to re-allocate your finances most effectively for yourself.

There are 3 major issues you should be aware of that most homeowners encounter when attempting a loan modification and they are as follows:

1)Qualifying-hardship: hardships could include loss of employment, death of spouse, job relocation, disability. You  need to show that based on the new terms of the loan that you do have the ability to pay it.

2)Documentation - the most difficult part experienced by many is the continued request for documents, often submitted on an initial request. The documentation is essential to determining the loan modification; all documentation is time sensitive and a missing pay-stub could delay or dismiss your request for modification.

3)Modification - The modification itself can be very difficult if the homeowner is acting on their own behalf; there are no promises or guarantee you will receive a modification, (an affordable intermediary may be necessary).

 However once received, you will be presented with a restructured payment plan that you can agree to or reject. Make sure you are in the bestposition to receive the best terms and conditions.