With all of the housing market trouble and increase in foreclosures, there have been many efforts aimed at helping homeowners find their way out of mortgage debt. In 2009, the government released the Home Affordable Modification Program in efforts to help homeowners lower their monthly mortgage payments and avoid foreclosure. Since its release it is estimated that only one-third of those who may have qualified have actually sought help. Why? Part of the reason is that lenders have been stubborn and unwilling to negotiate loan modifications. The other reason is that homeowners simply don't know what their options are or how to go about pursuing one.

Is It Right?

There are a few questions to ask before deciding to pursue a loan modification. First, can I really afford to maintain the mortgage at a lower payment? A loan modification may be able to lower the monthly payment, but it won't be able to save you or the home if you are experiencing a long term financial hardship. Second, am I planning to stay in the home for a long period of time? A common type of loan modification is extending the life of the loan. If you aren't planning to stay in the home for the next 8-10 years, extending the life of the loan may not be a good option. Last, is my home currently worth more than you owe on the mortgage? If you have an underwater mortgage, meaning your home is worth less than what is owed; your lender will not likely be willing to approve a loan modification. In these cases, most lenders prefer you to pursue a short sale or let the home go into foreclosure.

How Can I Get One?

There are many people offering up different advice when it comes to how to secure a loan modification. While much of the advice may be solid, the most important aspect to remember is never default on your mortgage on purpose. You may think your lender won't find out, but they there is never any benefit on purposely putting your home at risk. Instead, contact your lender at the first sign of trouble. Lenders appreciate open communication and many are more willing to negotiate before you even miss a payment. After all, the lender wants their money and defaulting on the mortgage is only a cause for concern. If you have missed a payment, don't worry. You can still contact your lender as soon as possible to begin the explanation process. It is important that you give your lender an idea of how your financial situation came about and what plans you have to resolve it. In fact, providing your lender with a few choices of how you can lower your payment and get caught up on your mortgage debts demonstrates commitment and responsibility.