Over a million homeowners across the country are struggling, confused and frustrated as they seek loan modification help. If you are one of these borrowers, you may get the help you need with a modification from your current home loan lender. A loan modification is a change in the terms to your home loan to make it more affordable. The Federal government is encouraging banks to offer interest rate reductions, longer loan terms and even principal forgiveness as a way to help borrowers stay in their homes. You may qualify for one of these programs, so now is the time to get help to submit your application and begin the loan modification process. Billions of dollars have been allocated to help distressed borrowers stay in their  homes.

Several lenders have recently announced new, more aggressive loan modification programs designed to reach out to their borrowers who are facing financial difficulty. These new efforts are designed to make the process more streamlined and reach more homeowners needing loan modification help. Bank of America, owner of Countrywide, is beginning a new loan modification program on December 1, 2008 which will propose modification offers to approximately 400,000 troubled borrowers. Indymac Federal has already granted loan modifications to approximately 50,000 borrowers and is proactively mailing offers to thousands of additional homeowners.

Not all homeowners will qualify for a loan modification. Each lender has guidelines put in place to determine which loans have the best chance of sustained performance and will not re-default after a modification is granted. Homeowners must submit an application that includes a breakdown of their current financial situation, showing their income and expenses. After reviewing this information, the lender will determine if the homeowner meets the required debt to income ratio for qualification. Most lenders have set the acceptable debt to income ratio at between 38 to 45%. This means that the total housing expenses: principal, interest, taxes and insurance do not exceed the allowable percentage of the total gross (before deductions) monthly income.

Borrowers will also have to show that they have suffered a financial hardship and are therefore unable to afford the current monthly house payment. There are as many hardship situations as there are borrowers, however, certain occurrences are widely acknowledged as acceptable hardships. Some of these include: death of a family member or co borrower, divorce or separation, loss of income, health/medical bills, military service, job relocation, disability. A well written hardship letter is important and will help get you the help you need.

Lenders have been flooded with calls from homeowners seeking loan modification help. A loan modification application that is completed properly and includes all of the required forms will get through the system much faster and have a better chance of approval. Take the time to learn about the process, find out what your lender requires for debt to income ratio so you can complete the financial forms properly. Even the most deserving homeowner may be denied the loan modification help they need if the application is not completed properly. This is not rocket science, but you do need to know the basics so you will have a chance at receiving approval.

There is a great deal of loan modification information available on the internet. Take the time to do your homework, learn as much as you can about how the process works so you will know what to expect. Whether you want to work directly with your bank to find a loan workout solution or hire a loan modification company, you need to have a general knowledge of the process so you will get the best results. Before you apply for a loan modification or hire a company to represent you, make sure you get unbiased and accurate information so you can make wise decisions. An informed homeowner is a powerful homeowner.

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