The purpose of President Obama´s Home Affordable Modification Program is to help homeowners that are having trouble making their monthly payment. It is also intended for the millions of Americans that are at a high risk of falling behind on their mortgage.

If you seek loan modification help, you must meet certain criteria and work closely with your lender to modify your existing mortgage, thus the expression loan modification. The changes to the term of the loan will become permanent.

If you are one of the millions of Americans struggling to make your monthly payment on your mortgage, or if you are already behind on a couple of payments, you may qualify for loan modification help.

Here are some of the requirements you must meet in order to qualify for loan modification help:

• You must be the owner and occupy the home
• The home may not by more than a four family home
• If the home is a one family house the amount of the loan must not be more than $729,750
• The first mortgage on the home must date from before January 1, 2009
  
• Your monthly mortgage payment, which includes taxes and insurance, must be greater than 31% of your pre-tax monthly take home pay
• You must be able to demonstrate and document financial hardship

To qualify for loan modification help you do not need to be behind on your mortgage, in fact, one of the reasons for the Home Affordable Modification Program is precisely to help homeowners before they fall upon financial hardship.  The program is intended to help homeowners avoid the threat of foreclosure.

If you meet all of the above requirements, and can prove hardship (divorce, family illness, unexpected expenses, reduction in income), than you probably qualify for loan modification help.

Once you contact your lender about applying for a loan modification, the lender will want to verify that you have enough income to make the future (modified) payments on your mortgage.

Once the lender makes you an offer for a modified loan, if you accept the terms you will be put on a 3 month trial modification test. If you make timely payments during this typically 3 month period, the lender will make the mortgage modifications permanent.

In order to lower your monthly payment, the lender may offer you a lower interest rate, a longer period to repay back the loan, or may even decide to forgo some of the loan amount. Another option is that the lender delay a repayment of a portion of the loan for the final payment. In this case you can end up with what is called a balloon payment at the end of the repayment period.

Unless otherwise prohibited by State law, and if your old mortgage payment didn´t include an escrow account, your new monthly payment will include an amount for taxes and homeowners insurance.

Since there is a financial incentive for home loan providers to participate in the Home Affordable Modification Program, chances are that your lender is participating in the program, so apply today.