The best way to pay off your real estate debt is making the on-time payments from the beginning. Still if you fall on bad times and if this makes it hard for you to go on making the mortgage payments, you can try to modify your home loan or refinance it. So, you will have to know what these two options are that can help you to become free of your secured debt and also retain your home.
What is loan modification?
Loan modification is the process that helps you to change the terms and conditions of your home loan so that you can go on making the payments against your home loan. Mortgage loan modification changes the terms and conditions of the home loan as per your affordability. It can lower the interest rate on your mortgage and may also extend the loan term. This helps you to pay off your real estate debt and retain your home. You are required to negotiate with your lender about the problems you are facing.
What is refinancing of your loan?
Refinancing is like loan modification too. This too helps in lowering the interest rate of your real estate debt and extending the loan term so that the money that you are required to pay lowers. As a result, it becomes easier for you to make the payments and thus you may not have to lose your home.
The only difference that is there between loan modification and refinancing is that in loan modification, you aren’t required to take out a new loan. But in case of refinancing, you are required to take out a new home loan in order to pay off the previous mortgage another difference between the two is that in case of mortgage modification you cannot go to a new lender for the modification. But in case of refinancing, you can go to the new lender for the loan refinancing.
So, if you want to retain your real estate, you can opt for any of the above two. If your lender agrees to modify your loan, it is better for you to get your home loan modified rather than getting a new loan.
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