Refinance vs Loan Modification

Faster loan modification approval

When Refinancing is Not the Solution

When refinancing your home you are securing a new loan in order to pay off the existing mortgage or to gain access to the existing equity in your home.  When securing a new loan, you should, however, shop around for rates and closely compare lending fees and costs.  It is a fact that lenders are not giving you  a loan out of their own generosity..  They are looking to make money from the transaction.  Because of this fact, you need to take a very close look at the fees you will be charged.

When refinancing your mortgage, you should be aware of what to expect. Assuming you’re not refinancing with your original lender you’ll be starting over again.  Expect to pay fees and points in the thousands of dollars, and expect the loan process to take up to eight weeks because there are not enough home appraisers.  You will also have to prove your credit worthiness again and pay for an approved Credit Report.  The various fees that you will generally have to pay include:  Title Policy costs; Attorney fees; Survey costs; and, Recording fees, among others.  If the loan you are refinancing is less than a year old the title insurance will likely be a little cheaper, but then you will run into the prepayment penalty issue.  Some lenders require a prepayment penalty if they have rolled your closing costs into the loan. In addition, some lenders tack on "junk fees" that add up to even more costs.  These may be generically named fees such as administrative, management, warehousing, processing or underwriting fees. 

A no-cost refinance allows borrowers to avoid paying upfront costs for a new home loan. Most borrowers choose to wrap their costs into the loan in order to avoid reducing their bank balance with closing costs. Therefore; in conclusion, a refinance is paying off one mortgage with a new one, so when you gather refinancing information,  make sure you ask each lender for a comparison of the principal, interest rate, monthly payments, and any fees for a no-cost refinance as well as a refinance in which you pay the costs yourself at closing.   Ask lots of questions and don’t sign anything you’re not completely sure about.

Loan Modification as the better alternative

The term and process of Loan Modifications were once unfamiliar to most homeowners; however most people are coming to realize is that losing their house to foreclosure is becoming a real possibility. Today home foreclosures in America are at an all time high and are affecting many homeowners. At one time, they would have never believed they could lose their home to foreclosure.  In this slowing economy, a Loan Modification may be the only way for a homeowner to save their home. Often their home is the biggest investment of their life. 

In essence, a Loan Modification allows you the opportunity to change the existing terms of your loan without the new closing costs, legal fees, survey costs, appraisal fees or taxes and you will not have to prove your credit worthiness again.  With a Loan Modification you can substantially lower your interest rate, extend the term of the Loan from 30 years to 40 years, get a Principal Reduction and delay any Foreclosure Proceeding for up to 90 days with the Government Home Affordable Modification Program (HAMP).

A Loan Modification can lower your interest rate to as low as 2.0 %, which is often much lower, than any Loan Refinance that you can attain. The difference between an interest rate of 2.0% in a Loan Modification plan compared to an interest rate of 4.0% - 5.5%,  that you might achieve with loan refinancing, is substantial over a 30 year Mortgage Loan.  If you have credit problems, you will pay even a higher interest rate when you try to refinance, even though we are in a time of record low interest rates.

You cannot afford to waste any more time, now that you have a viable solution to your mortgage problem. Save your home and protect your family.

Contact America’s Property Solutions, LLC

at 505-407 1281