3 thoughts on “What’s the Difference Between a Loan Modification and a Refinance?”

1. A refinance is when your property has enough equity that will cause a lender to take your current mortgage and completely redo the entire mortgage. You may simply refinance for terms. This mean that you are attempting to lower your monthly payment by getting a lower interest rate.

   If you have a lot of equity you force get cash out to buy cars, house hold appliances or pay off credit cards.

   This refinance can be done by your current lender or you force select a different lender all together.

   With this refinance you have a new terms on your mortgage. If you had paid your current mortgage for 15 years, you now have a new 15 years in which to pay this new refinance.

   You would be required to pay points and fees for this refinance.

   A modification is normally done by your current lender. This modification can change the terms of your mortgage loan, the interest rate which will affect your monthly payment. They could also base this modification on the current value of the property, thus lower the amount you owe causing your monthly payments to be lower.

   This modification is a request for consideration by your current lender and could be approved or denied.

   There force be a fee charged for this modification, which could be as low as one point of the loan amount or the new value that is being used.

   I hope this has been of some subsidy to you, good luck.

   “FIGHT ON”

2. A modification is simply a change in your loan terms based on pressure and situational factors..it does not involve credit like a refinance does. To be eligible for a modification, the borrower must have a hardship and show the ability to pay their monthly debts and bills. The HAMP, or Obama plot, makes your monthly mortgage payment 31% of your yucky income. It will bring you down to this level by reducing your principal, bring you to the lowest 2% rate, drawing your amortization out to a max 40 years, or any combination of the three. If you have a fannie/freddie its pretty much a shoe in.

   The fees for a modification are from 2-4k, whereas the price for a refinance can be significantly higher. A modification is a refinance all in one, with no closing costs, except for what you pay the attorney to handle it for you. Contact me if you wish to get further explaination-Best of Luck

3. The eligibility supplies are different. See the attached articles to see if you meet the supplies for either program.

   For example, to refinance you cannot have been more than 30 days late on a mortgage payment in the last 12 months.

   For a loan modification you can be in pre-foreclosure and still qualify.

   The programs are completely different, but both were designed to try to make mortgages more affordable for people that find themselves with mortgages that they can no longer meet the deprivation of.