What is the difference between Mortgage Modification and Refinance?

Also, if a wanted to do a Mortgage Modification should I do it directly with the bank I have the mortgage with or should I seek help from a lawyer or those institutions that do mortgage modifications?

By | 2013-08-27T17:22:36+00:00 August 27th, 2013|Mortgages Home Loans Interest Rate|3 Comments

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  1. njsm2010 August 27, 2013 at 6:50 PM - Reply

    Modification simply modifies your existing mortgage while a Refinance initiates an entirely new mortgage with new terms. You should always do the easiest thing first which is to consult the lender you have the original loan with and ask about modification. They have a financial interest to work with you, if they choose, but no legal obligation to do so.

  2. SmartA$$ August 27, 2013 at 6:38 PM - Reply

    Modification: Modify the existing loan with new terms (interest rate, amortization period, etc). You’re only modify the original, not getting an all new mortgage, so you can only do it through your existing bank. A lawyer won’t really help, but they’ll be happy to take your money in exchange for filling out paperwork that you could do yourself.

    Re-Finance: Finance the balance again by getting an entirely new mortgage and using the money from the new loan to pay off the existing loan. You can pick any lender who will make the new loan. The bank that holds the old (existing) loan can’t stop you from doing this because you’re allowed to pay off the loan in full at any time, although some mortgages have a pre-payment penalty if you pay it off too soon.

  3. Ryan M August 27, 2013 at 5:59 PM - Reply

    One destroys your credit and the other does not. Since a modification is NOT an entitlement, a lawyer cannot really help you. There is no LEGAL issue. You can try to work with the bank or a separate entity, but you bank is under no obligation to do anything either way.

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