Relief from the stress of making the mortgage payment is now available, as many homeowners are discovering, thanks to new loan modification options. You may be eligible for loan modification and thus put to rest your fears of foreclosure. Read on to learn how this program works.

Step 1 in loan modification is to find a qualified financial advisor. Nonprofit organizations approved by HUD provide free counseling. Due to the large number of homeowners seeking loan modification relief, there are now loan modification companies to help you too. While you can deal directly with your lending bank, it's often best to work through a third party advisor who can manage the procedure and go to bat for you with your lender if need be.

Your first meeting with your loan modification advisor involves discussing your current finances. The two of you will cover the choices available to you, and to arrive at the preferred plan of action. If loan modification is right for you, you will need to compose a loan modification hardship letter. This letter will be delivered to your lending bank to explain your financial hardship, and why loan modification is necessary to avoid foreclosure. The letter must show you are responsible and committed to keeping your home.

Your financial advisor will include any of your necessary financial documents with your hardship letter. Thus the lending bank can decide if they can work with you on a loan modification agreement. Your lender must be convinced by your hardship letter that you are serious about meeting the payment terms you propose, and able to do so, based on the accompanying financial documents. If your lender agrees, then you should qualify for reduced payments that allow you to stay in your home.

If your lender can calculate an adjustment that shows your debt-to-income ratio within the range of 34 to 45% of your gross monthly income, they will probably take your loan modification application seriously. Your debt-to-income ratio is simply the percentage of your gross monthly income used to pay your monthly mortgage. Private lenders and the government alike now have loan modification programs available, so more homeowners than ever are eligible for these programs.

The main point is to take action as soon as possible, once you feel your mortgage is no longer affordable. The sooner you act, the easier it is to get a loan modification and prevent foreclosure on your home.