Home Loan Modification Versus Mortgage Refinancing – Are they Same things?
What is the difference between home loan modification and mortgage refinancing?
Many home owners think that loan modification and mortgage refinancing both are the same things. But well, this is not the truth. Actually, both are the different things. Here is how.
Loan Modification means modifying your existing loan terms with your lender. It can be interest rate reduction, extending the loan period or even principal reduction of your home. Loan Modification comes under President Obama’s “Making Home Affordable” Program.
If you want to do a Loan Modification of your property than download 60-minute loan modification workbook and do it by yourself. Loan Modification is always a better option than refinancing to avoid foreclosure of your property.
Mortgage Refinancing means your existing loan will be transferred to the another lender. This is because the another lender may give you lower interest rates and extension of loan period. Mortgage refinancing is selling your existing mortgage note to another lender by increasing the loan amount to cover the costs associated with the refinance. Usually this ends up costing you more money than a mortgage modification about 3000 dollars for every 100000 dollars financed. You need good credit to refinance.
Thus, both are the different terms and if possible, you should go for the loan modification to stop foreclosure and save your house.