Although the two may achieve a similar result – a smaller monthly payment – a mortgage modification differs from refinancing. When a homeowner refinances a mortgage, their current mortgage is paid off and it is replaced with a new mortgage. This means that homeowners do not have to stay with the mortgage company that they are currently with, and they can shop around for more attractive offers with a variety of different lenders. They may be able to lock in a better interest rate with a different mortgage company, or change the type of mortgage that they have, and thus, they can pay less each month than they are currently paying. The mortgage modification is done with the same company. Although some of the terms may change, the mortgage does not end, as it would in a mortgage refinancing.
Refinancing may appear to be a preferred option, but there are many reasons why refinancing may simply not be an option. Most importantly, you typically need to have good credit to refinance your mortgage with a new company. If you have missed a mortgage payment, that may be enough for a new mortgage company to decline to refinance your loan. However, credit history does not matter as much in a mortgage modification, since it is with the same company. If a homeowner owes more on the home than the home is worth due to a change in property values, then a new mortgage company may not be willing to take that risk on. However, since the current mortgage company has already taken the risk on, they would rather continue to get paid. In some instances, mortgage modification is more readily available than refinancing.
The Mortgage Modification Center
If you are struggling to make your mortgage payments, or you are currently behind, a mortgage modification may help. The highly-trained staff at the Mortgage Modification Center may be reached at (401) 467-7998 for a free consultation and evaluation of your options.