Loan Modifications

What is a Home Loan Modification?

A home loan modification is much like a mortgage refinance in that the objective is to find you a more affordable mortgage payment for your financial situation. In fact, it is often called a modified refinance. The primary difference is that instead of looking for a "new" loan you will simply "modify" the terms of your existing mortgage.

Why a Loan Modification vs. Refinancing My Mortgage?

Refinancing your existing mortgage to obtain a more affordable mortgage payment could still be an option. Unfortunately, for an increasing percentage of homeowners it is not. That is precisely what loan modifications are for, the homeowner that has incurred a financial hardship that prevents other mortgage financing or payment options.

Caution:  There's No Strategy to Ruining Your Credit

Walking away from your mortgage can be incredibly dangerous when considering your financial future.  In a “strategic default,” homeowners simply choose to walk away from their mortgages—in other words, move out and stop paying. This is often done when a homeowner owes more on the home than it’s worth or is “underwater.” Most of these homeowners do not understand that walking away will expose them to foreclosure, which carries credit issues, current and future employment challenges, issues with security clearance, and possible debt collections. Due to current economic conditions, one in four American homeowners have found themselves underwater on their mortgages, and millions can no longer afford to make their payments. Fortunately, you have options to avoid foreclosure and protect your financial future.

 

Solutions for Financial Stability

Short Sale

Generally considered one of the most viable alternatives to foreclosure, short sales allow homeowners to minimize financial damage and move on from a burdensome, unaffordable mortgage. In many cases, short sales allow borrowers to qualify for a new mortgage in as little as two years, as opposed to five years or more after a foreclosure.

Demystifying Short Sales

There are many myths about how short sales work, including the rumors that they have the same affect on your credit as foreclosure and are impossible to complete. I can show you how that’s just not true, and how securing a loan for a home in the future is much quicker after a short sale rather than a foreclosure. New bank and government short sale programs have also made the short sale process a more streamlined, efficient process for all parties to the transaction.

Benefits of Short Sales

• Avoid foreclosure at no cost to you

• Lesser impact on credit scores

• Security clearance protection

• No challenges to future employment

• Retain some control over the sale of your property (vs. public auction)

• The ability to negotiate away a deficiency judgment (collection of your mortgage debt)

• Shorter waiting periods to get another mortgage

Other Alternatives to Foreclosure

Reinstatement

A reinstatement is the simplest solution for a foreclosure, but often the most difficult to achieve. The homeowner simply pays the total amount past due (including late fees) to the lender.

Mortgage Modification

A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these.