These two terms, short sale and loan modification, have recently become everyday words. Homeowners have been forced to find solutions to a mortgage that has become unaffordable. Financial relief is possible, but you have to choose the right solution.
I am not going to discuss foreclosure here as that is never the best answer to a mortgage that is no longer affordable. So, let’s discuss the other two options of a short sale or loan modification.
A loan modification occurs when the lender agrees to change one or more parts of a mortgage to make the loan more affordable. The borrower must be able to repay the lender and must provide evidence this is possible. A loan modification is best for borrowers who are behind in their mortgage payments but have a plan to repay their debts. The bank will work with you if the problem is not permanent and it will turn around quickly. In other words, your non-payment or shortage of funds issue must be curable. If it is not, the lender will not agree to new mortgage terms. Check out www.makinghomesaffordable.gov to see if you qualify for a loan modification under the government’s Help for Homeowners program.
A short sale would be the choice for homeowners who are experiencing a hardship like job loss, illness, or loss of spouse, and there is no hope that the mortgage will be affordable. A short sale is a responsible and proactive solution when you cannot make the payments and your only other option is foreclosure. Doing nothing assures a foreclosure and this would be the worst possible option for you. I
f you think the short sale option is the one for you, be sure to work with a REALTOR® who has knowledge and experience in short sales and works with a team of skilled negotiators. There is an awful lot that goes into the short sale completion process. Having professionals well versed in the procedure is absolutely necessary to the successful outcome.
Barbara Altieri REALTOR®