What’s the difference between loan modification and refinancing?
A refi is paying off your current mortgage and replacing it with a new agreement. A modification is a hardship program (which you will have to prove) to help prevent you from falling into default. A refinance is usually the best way to go if you don’t have a hardship, good credit and are not underwater.
In a refinance, you’re not making any changes to your current home loan but rather taking out a new mortgage loan to pay off your current home loan. Your new mortgage will often carry a different monthly payment and interest rate than your current mortgage. You may refinance with your current lender, or you may find a different lender to do your refinance. In a loan modification, unlike a refinance, you’re not borrowing any more money or taking out any new loans. Instead, you’re negotiating with your current lender to adjust the monthly payment, interest rate, or other terms of your current mortgage.
