A loan modification is a change made to the terms of an existing loan, typically to make it more affordable for the borrower. This can involve adjusting the interest rate, extending the loan term, or reducing the principal balance. Loan modifications are often sought by homeowners facing financial difficulties, such as job loss or medical expenses, to avoid foreclosure. Lenders may offer loan modifications as a way to help borrowers stay in their homes while still receiving payments. The process usually requires the borrower to provide financial information and demonstrate their need for assistance. Successful modifications can lead to lower monthly payments and improved financial stability.