Should I Refinance, Seek a Loan Modification, or Short Sell My House?

Homeowners that seek options to rectify their distressed mortgage situation really only have a few.  Refinance, Loan Modification, or Sell the Property (most times through a short sale).  If there has ever been an instance of a late payment, refinancing is most likely out of the question.  Through the "Making Home Affordable" plan, there are two options:  a refinance program for borrowers who have very little equity in their home, and a mortgage modification program to reduce mortgage payments for struggling homeowners.

The mortgage modification program will allow distressed homeowners to work with their lender to change the terms of their current mortgage loan.  A possible solution as a result is lower mortgage interest rate and lower payments.  It is designed for borrowers that have a major hardship, such as a significant drop in income, unavoidable and unanticipated healthcare costs, or other serious hardships.  The program is designed to prevent foreclosure.

Do I qualify for this program?  Check out our loan modification calculator to see a quick analysis.

The third option that a homeowner in distress has is to sell the property.  If there isn’t any equity in the property, the best option is to find a proven company that can assist in negotiating with your lender in working a short sale.  In some cases, depending on the lender, there may even be a partial forgiveness of debt.  Finding a reputable company that can assist in this process is crucial, because the difference between getting a loan in 2 years (after a short sale) vs 5 years (foreclosure) is quite significant.