Under current economic conditions many homeowners are faced with the possibility of losing their homes because they are no longer able to make the payments. For these homeowners mortgage foreclosure is a real fear, and they seek ways they can possibly avoid this possibility. After all, not only will a foreclosure affect the homeowner’s credit history, but he or she must also resort to rental housing which may possibly increase the financial burden in many cases.

Using loan modification services can help many homeowners hold on to the homes in which they live. In today’s market it can be difficult for a homeowner who is facing a financial crisis to attempt to save his home from foreclosure by selling although short sales are pretty common in many areas. For homeowners who have the financial means to continue making payments on their homes but currently have a mortgage payment that exceeds 31 percent of their gross monthly income loan modification may be just the answer they need. These homeowners can avoid mortgage foreclosure by restructuring their mortgage contracts into terms they can afford.

This doesn’t mean everyone will qualify for loan modification services by any means because there are certain qualifications both borrower and lender must meet. First and foremost the borrower must be able to prove he will be able to make the payments on the new loan and that based on his income the payments will not exceed 31 percent of his gross monthly pay. This may eliminate borrowers who rely on unemployment compensation or have been forced to accept jobs that pay substantially less than they earned when they purchased their homes. Lenders do not want to provide borrowers with false hope and for many loan modification only provides a temporary respite from mortgage foreclosure.

For those homeowners who only need a short-term “fix” loan modification may not be the right answer—at least not a long-term program. If your financial crisis is temporary such a when there are substantial expenses connected to hospitalization or caring for an ill relative, engaging in a three or five year modification plan may suit your needs better than remortgaging your home for 30-40 years. The reduction in interest that accompanies a long-term plan will also reduce the amount of equity that builds in your home, especially during the present economic downturn when housing costs are so uncertain.

Loan modification programs are not the answer for everyone who is facing mortgage foreclosure; many people still end up losing their homes even after they enter into a modification agreement. This may be because they lose additional income or have additional obligations that still prevent them from making good on lower mortgage payments. The program is not the answer for everyone—in fact not everyone qualifies since borrowers must prove the have the income to make the payments and lenders must prove they can increase their cash flow after loan modification. However, many people do indeed benefit from loan modification services.