What's the difference anyway?

If you are behind on your mortgage payments, or simply are having difficulty staying current with your payments, you may have either considered refinancing your payment plan in lieu of short selling or letting your house go to foreclosure. What many homeowners do not realize is how difficult it is in this economy to actually refinance a mortgage unless you have close to perfect credit.

Mortgage companies are now starting to stop foreclosure sales as a result of the Government taking over Freddie and Fanny. The banks are sending short sales back to the homeowners to attempt to first modify their loans so to allow them to keep their home irrespective of their failure to pay their mortgage payments. Therefore, debtors will begin to see an order of process for homeowners to fight to keep their homes in these unprecedented times of financial suffering.

A loan modification will be likely the first step for homeowners to consider. A loan modification is simply the mortgage company modifying the current terms of their mortgage. An ‘Own American Homes’ Loan Modification Specialist will arrange a mortgage company to modify their mortgage because of being late on payments, variable interest rates, too high of monthly mortgage payments and etc. There are many aspects to modifying your payment terms that differentiate refinancing a mortgage to modifying mortgage.

When refinancing, you may or may not move into a fixed interest rate. You may or may not decrease your payments. The biggest benefit to refinancing is often the ability to pull out equity in order to pay other bills. As stated earlier, you will need to have very high credit in this market to refinance.

A loan modification is generally considered a short term refinance, in order to help you get back on your feet, or to wait out this uncertain real estate market. You will be moved into a lower fixed interest rate, for five or ten years. The most significant benefit of a loan modification is that your credit score does not come into play. An attorney will negotiate with the bank on your behalf based upon your hardship. As such, your credit is not affected with the change. There are no closings needed in a loan modification, as such, there are no closing cost, no points being paid, no new title insurance fees, no application fees, or any other fees typically incurred in a traditional mortgage transaction.