If you’re struggling to make payments on your home, or you’re simply looking to avoid financial hardship, you may be considering loan modification or a short sale. While both options can provide you with the financial relief you’re looking for, the choice that’s best for you will depend on your unique situation.
Regardless of your circumstances, an experienced real estate attorney can help you make the best, most cost-effective decision for you and your family. Read on to learn more about the benefits and drawbacks of loan modification and short sales. Afterward, schedule a case evaluation with a qualified real estate attorney.
What is Loan Modification?
Home loan modification is the process of changing the terms of your loan. These changes are ultimately decided by your lender and may involve an extended payment period, a lowered interest rate, or a completely different type of loan.
While loan modification will usually increase the overall amount you have to pay back, it can give you more flexibility in your payments and help you avoid payment delinquency. Most successful loan modifications are carried out with the assistance of a real estate attorney.
What is a Short Sale?
As the name implies, a short sale is when you sell your home for less than the amount you owe on the mortgage. Most people choosing a short sale are in financial distress and are looking to avoid payment delinquency that leads to foreclosure.
When a short sale takes place, there is an amount, known as a deficiency, that is not covered by the sale. For example, if you owe $125,000 on your mortgage, but sell your home for 100,000, you will have a $25,000 deficiency. The lender may agree to forgive this amount, but this is not always the case.
While a great option for many homeowners, short sales require extensive paperwork and legal permission from your lending institution. It’s recommended that you trust this process to the expertise of a real estate attorney.
Short Sale or Loan Modification: Which is Better?
Choosing between a short sale and home loan modification will depend on your financial situation and whether or not you’re willing to part with your home. If you plan to sell your house sometime in the future, it’s probably best to go with a short sale, since selling your home after loan modification will usually end up costing you more money in the long run.
If you’re looking to quickly reduce your debt, a short sale may be your best option. The terms of a short sale will depend on your agreement with your lender and whether or not they’re willing to forgive your deficiency.
At the end of the day, it’s best to discuss the decision you make with a qualified real estate attorney. They’ll explain all of your options and help you make the most cost-effective choice for you and your family.
Can I Sell My Home After Loan Modification?
In short, yes, you can sell your home once your newly modified loan has gone into effect. However, keep in mind that you may owe a prepayment penalty, depending on the contract you have with your lender. This penalty is applied when you pay off your loan early.
While you have the ability to sell, it is not usually recommended to pursue a short sale after home loan modification. If you’re unsure what to do, speak to your real estate attorney about your options.
Schedule a Case Consultation in Cicero
If you’re considering loan modification or a short sale, trust the experts at Koch & Associates P.C. Attorneys At Law. Our lawyers have years of experience handling real estate matters for our clients. We’re the most trusted real estate attorneys in Cicero and the surrounding communities.
Call us today at (708) 656-9900 or schedule a case consultation on our website.
