Homeowners who are finding it difficult to keep up with their monthly payments have two choices, either to refinance or modify their loan. Refinancing and loan modification are two different methods, but they both aim to make a mortgage more affordable. However, some homeowners may not qualify for either option. Struggling homeowners, especially those facing foreclosure, should consult with a qualified Miami foreclosure defense attorney to learn whether the two options discussed below are open to them.
Refinancing entails replacing the existing mortgage with a new loan that has a lower interest rate, reduced monthly payments, and/or better terms. Homeowners seeking to refinance can compare the rates and terms of different lenders, then choose to work with the bank offering the most favorable mortgage. Refinancing is a method of lowering mortgage payments permanently.
Loan modification entails adjusting the terms of the existing mortgage for a short period of time to make it more affordable for the mortgage holders. The original loan is still in place, but it is modified to lower interest payments, extend the terms, and/or defer payments. Homeowners are limited to working with their current lenders since they are the ones responsible for modifying the mortgage.
Challenges of Qualifying for Refinancing
Not all homeowners can qualify for refinancing, those with good credit scores, cash funds, and homes that have the same or increased market value from when the original loan was granted are far more likely to be eligible. Unfortunately, homeowners who have recently missed one or more mortgage payments are likely to have lower credit scores and limited access to cash, thus making them ineligible for refinancing. Similarly when a home’s market value decreases, homeowners owe more on their mortgage than their home is worth, also making them ineligible.
Loan Modification for Struggling Homeowners
An effective alternative to refinancing is a loan modification. A loan modification is designed to assist struggling homeowners for a set period of time until they are caught up with their missed payments and are capable of making full monthly payments again. Therefore, homeowners struggling financially or facing foreclosure may be able to obtain a loan modification, especially if they work with a Miami foreclosure defense attorney.
Even though many lenders are willing to offer loan modifications as an alternative to foreclosure, some may take more convincing. Having a Miami foreclosure defense attorney, especially one specialized in filing loan modifications, representing you will incentivize the lender to offer you a loan modification that fits your needs.
If you are struggling to make mortgage payments and facing foreclosure, consult with a Miami foreclosure defense attorney to find out if a loan modification or other alternatives are available to you. Call Graham Legal today for a free consultation.