How does loan modification typically benefit borrowers?

Loan modification generally benefits borrowers by adjusting their payments to make them more manageable. This process often involves altering the terms of an existing mortgage to lower monthly payments, reduce interest rates, or extend the loan term. These adjustments can help borrowers who are experiencing financial difficulties, enabling them to maintain their mortgage payments and avoid foreclosure.

For example, if a borrower is struggling to keep up with their loan payments due to a temporary loss of income or other unexpected expenses, a loan modification can provide the necessary relief by making the payment amount more affordable. This modification can help stabilize the borrower's financial situation, allowing them to continue their homeownership journey without succumbing to the pressures of unaffordable mortgage payments.

While the other options touch on aspects of mortgage arrangements, they do not accurately describe the primary function of a loan modification in relation to borrower benefits. A typical loan modification does not increase the loan amount, eliminate mortgage insurance, or specifically reduce the credit score impact in a way that is guaranteed. Instead, its core benefit lies in making payments more manageable for the borrower.