Definition of a Mortgage Modification

• The purpose of a home loan modification is to reduce the monthly payment on a home loan, thus creating an affordable, more manageable monthly note. Borrowers can refinance to lower their interest rate and reduce the note as well. However, refinancing requires a good credit history, and being late on payments can disqualify a borrower. With loan modification, lenders take into account a borrower's financial troubles and offer assistance to help them keep the property. Modifications lower the existing interest rate, which in turn lowers the payment.
  
  

Write Out Monthly Expenses

• The first thing lenders will consider with a modification is your monthly expenses in relation to your home loan payment. Modification requests are not approved if you have adequate income to meet your mortgage expense. Draw out a list of your monthly bills such as housing expense, transportation costs, insurances and utilities. Next, provide your lender with copies of your most recent income statements. Do not misrepresent your income and monthly bills. Lenders will verify the information listed, and falsifying records may result in a modification rejection.
  
  

What Can You Afford?

• Mortgage lenders will adjust your mortgage payment to help you keep the house. However, it helps to know what you can afford when negotiating a monthly payment with your lender. Review your own finances closely, and present your findings to your home loan lender. For example, if currently paying $1,400 a month, but your able to afford $1,100 with no trouble, ask your lender to reduce your payment to this amount. They will either approve your request or negotiate a different payment.
  
  

Explain Reason for Requesting Help

• Mortgage lenders will require more than a list of your expenses and information on what you're able to afford. They have to ensure that mortgage problems aren't the result of poor financial choices. Gambling away earnings and savings will not result in a loan modification. Modifications help individuals who may lose their job or suffer from an illness or injury that prevents full-time or regular employment. State your case when discussing modification with your lender. Provide details on why you got behind on mortgage payments, or why you feel that a foreclosure is imminent without assistance.