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Can anyone explain to me, in simple layman's terms, what is the difference between a loan modification (with your existing mortgage company) and a refinance loan?

Is a Loan modification simply a refinance of your loan, but with the same mortgage company and less or no fees?

Or am I way wrong here? I don't want to get into something that I am under the wrong impression about?
Thank you!

Posted: Sun Sep 28, 2008 1:25 pm Subject:

A loan modification is just that...your current loan may change either by it's interest rates, but usually, it is an "extension" of your payments. Let's say you are 2 months behind, they may forbear those 2 months and put them on the end of the mortgage, or may take the past due amount and divide it over 12 months so your payments may change. For example, if your mortgage was originally 360 months, now it may be 362 months, or if your payment was $1000 a month, it may now be $1200 for 12 months.

A refinance is usually a completely different loan and can result in additional closing costs. With a loan modification there are usually no fees incurred.

Hope this helps!

Posted: Sun Sep 28, 2008 1:28 pm Subject:

A loan modification is with your current lender, and while I have read other postings about fees, I did not have to pay any for my modification. Basically, I went to my mortgage company and explained that I was having a hardship but wanted to keep my house, I filled out some forms, answered some questions, and got a temporary adjustment to my payment terms--not to the actual balance of the mortgage. Mine is for three years, reduced interest and interest only payments. At the end of the three years, my unchanged principal balance is reamortized for the remaining life of the loan, and I will be back to paying principal and interest both (slightly higher principal payments because I won't have paid any for three years, and the loan payoff date remains the same). I'm not sure what other modification types are available out there, but that's mine.

A refinance would, of course, be paying off your current lender with funds from a different lender, whom you would then owe the money to instead.

Posted: Mon Sep 29, 2008 7:30 am Subject:

Now I went through a company and got my loan modified with my same loan company. With this, I got permanent lower payments along with a lower fee for the duration of my loan, unless I decide to refianance. I had gotten behind again, so needed to do something. I am going to have to pay a fee to the mortgage company, but for us, it is a small price to pay.

We had tried to refiance and our mortgage company would not let us....they are WaMu!!! Do your research, talk with your mortgage company and see if they will work something out with you and if you are not satisfied or they cannot, then check into other avenues. I lucked out with a company that did a good job, and yes I had to pay them, but again, for us, it was worth it.

I do know we found out that we were charged fees that were "snuck" into the contract, among other things, so.....

Start at one place and then go forward from there.

Guest · Posted: Tue Oct 14, 2008 4:47 pm Subject:

Contact Sun trust Funding. A lot of the time Lender's will just say if you are not behind on your payments... the answer will more then likely be No. Or the borrower gives the lender to much information and it ends up hurting the borrower in the end. With the company that I listed above, they will tell you up front if they can help you and if they cant they will give you at least second option. and that they have attorneys that back them to even the playing field between lender and borrower. Obviously there will be a fee ( nothing is free) I do know though that rates and fees vary on the case. Now if you go through the lender because they happen to say yes you will not get as low of a rate that you could get if you go through a third party. ( even playing field remember. lender can't take advantage.) And right now in my opinion and dealing with this situation day in and out It is probably one of the smartest investment you can make. 1st and for most you get to keep your home. ( whole purpose to finding out this info right.)If anyone has ever made a serious investment they know that you spend a little to make things work properly. Please check them out your homes are your's and your families memories. I think that just that in itself should be enough to call and get the help you need. :0)

Posted: Wed Oct 15, 2008 7:06 am Subject:

I can't afford to pay the fees that those companies want, and amazingly enough after all of this financial drama in the markets and the bailout, when I recalled both of my mortgage companies, NOW they'll talk to me.

I do have a question, does anyone know if including my husband's new income now that he is working will help or hurt me as far as anything goes?

Posted: Wed Oct 15, 2008 7:42 am Subject:

What you will probably have to do is send them a budget of all that you have going out, with and without the mtg payment. As far as hurt or help, it could go either way. They are going to look at what you have left over after you pay everything (not including the mtg payment) to decide whether or not to modify the loan or if they feel you can afford pymts to stay the same or increase. If you can, you might want to let someone look over your mtg papers to see if you were charged any of the "hidden" fees. Do want to say that if your mtg company does do the modification, most of the time you can expect to pay a fee to your mtg company for them doing this. Yep, they get you coming and going.

Posted: Wed Oct 15, 2008 9:01 am Subject:

I didn't have to pay a fee to my mortgage company. However, the way I originally submitted the papers, we didn't have ENOUGH income to qualify because we didn't have enough to pay all of our bills even with a modification. The rep worked with me to change things around (taking off credit card payments since we were filing BK and adding overtime that my husband was receiving at the time), so that then we showed enough income to pay what was left but not too much to qualify for the modification.

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Loan Modification (if that's what it's called?)vs: refinance?

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