Loan Mod Vs Short Sale

Knowing Your Options:

Loan Modification Vs. Short Sale

What is a loan modification?

  When you are having financial trouble (divorce, job loss, death in the family, etc.), you have the option to negotiate with your lender for more affordable terms on your loan payment. By negotiating, there is the chance to lower monthly payments, interest rate, or other terms in your loan contract. The lender will not necessarily lower your payments, but discussing with your lender about a loan modification is the first step.

What is a short sale?

     When you fall behind on your mortgage payments and there is a chance of a foreclosure, the bank may accept a short sale. A short sale occurs when the bank agrees to accept less than the amount that you owe them. By allowing a short sale, the bank can avoid the expensive and time-consuming process of foreclosing on your home. Most importantly, a short sale protects your credit.

“Which option is right for me?”

  For those who believe their financial situation is a temporary hardship, a loan modification will allow you to remain in your home. If you are no longer able to make payments and need to get out of your home, you should avoid foreclosure by negotiating a short sale with your lender. Mortgage lenders will generally accept these common reasons for short selling your property:

- Family illness or injury

- Illness or injury in the extended family (particulary if it forces relocation)

- Job relocation when there is not enough equity in the property

- Job loss or significant income loss

- Divorce or split in domestic partners

- Adjustment in mortgage payment or unforeseen increase in living expenses