As millions of Americans face foreclosure, Obama’s federal loan modification plan has left many of us with questions and confusion. What are all the programs and would you qualify for any of them? How is that $75 billion from Obama’s domestic stimulus plan being used? If you are one of those millions of Americans, it’s time to get the facts and take the necessary steps to save your home.

How do you start? Which option is best for you? We’ll try to answer these questions and put you on the right path to your own home loan.

1. Loan modification, what is it? It simply means that you keep your same lending institution, but the terms of your loan change. Some of the changes you may qualify for include a lower interest rate, lower monthly payments, extending the length of your loan, and even reducing your principal. The changes may be temporary or permanent depending on your specific situation, but the end result will be keeping your home!

2. Does the federal government require my bank to modify my loan? All federal modified loans are voluntary. Your lender will review your loan and decide if modifying it will benefit everyone involved.

3. Do I have to be in default to qualify? Absolutely not! Obama’s housing stimulus plan includes an incentive for lenders who can modify a loan before it goes into default. The reason for this is simple, help the owner before they fall behind. Loans that are in arrears and in the process of execution will have preference due to their urgency.

4. Would you qualify for financial hardship? If your financial situation has changed dramatically due to circumstances beyond your control, the most likely answer is YES. Lost your job, suffered a serious medical expense, or got divorced? Maybe you were serving in the army. These are all circumstances that you can explain in detail when you write your hardship letter to your lender.

5. How can I find out if I qualify for a loan modification? Each home loan modification program and each individual lender has their own guidelines and criteria. If you can meet those guidelines and criteria, you have a good chance of qualifying.

6. When should I call my lender? Being prepared is paramount! Your first step should be to create a budget, prepare your financial statements, and create your hardship letter. Call your lender only after you’ve done your research, know what the requirements are, and are ready and able to meet them.

7. How much does a loan modification cost? There are NO upfront fees under the federal loan modification plan. The only time money up front can come into play is if you’re significantly behind on your mortgage payments. If this is the case, your lender may request a deposit in good faith.

Statistics show that more than 150,000 homeowners not only got a loan modification, they did it on their own. The best course of action to start with is to do your homework! Do your research, gather as much information as you can, and prepare before you begin the home loan modification process.