As the most popular and available option for foreclosure avoidance for most homeowners, loan modification is constantly growing in demand. But a lot of people looking into modifications only know that it can lower their interest rates, and are left wondering what is a loan modification. There is no mystery around it: Most don't bother to ask many questions until it all comes down on the line. But a little information before foreclosure comes knocking on the door can save more than a headache.

Here are some hints and bits of information on modifying loans for those who are just now looking into the subject and wondering what is a loan modification:

- Loan modification is an agreement with a lender to lower and fix interest rates based on a household's debt-to-income ratio. Some lenders also offer loan modification programs that wipe away part of the principal.

- Modification is only available to borrowers who are going through a period of financial hardship and are having difficulty making ends meet and affording their monthly mortgage payments.

- Any borrower looking into modification can only have it done once, and it must be on the piece of property they reside on.

- The maximum property value allowed for modification is usually $795,250 dollars -- some lenders require it to be less.

- Calling a lender to request their requirements is a must before applying for modification. Knowing a lender's requirements can assist in filling out the application, writing the hardship letter, and gathering the financial documents needed to be approved.

- The hardship letter to be send in to a lender must state the circumstances around ongoing financial hardship as well as the rate the homeowner is seeking.

- All lenders require recent pay stubs (bank statements for those who are self-employed), documentation on monthly expenses, and the most recent income tax documents. Some require a written budget.

- There are FHA-appointed representatives available in each state who can give free consultations to homeowners who are not sure about their chances of getting a loan modification. These representatives can also serve as mediators between homeowners and their lenders to come to agreements on modification terms.

- It usually takes up to eight weeks for a modification application to be worked out, whether approved or not. Utilizing an FHA representative may speed up the process.

To answer the question "What is a loan modification": A loan modification is the only way most homeowners can stay in their homes if they're having financial troubles big enough to affect their ability to pay their mortgage.