Should I modify my loan? - Reid Real Estate Group
September 7, 2017

Should I modify my loan?

A lot of my CT short sale clients have either considered a loan modification or been turned down for one by the time they have made the decision to short sell.

In a loan modification the lender makes permanent changes to the terms of your mortgage resulting in a more affordable payment. Keep  in mind that while a modification will reduce your payment, it will not reduce the amount you owe on the property.

IN FACT, IN ALMOST EVERY SINGLE INSTANCE, A LOAN MODIFICATION WILL INCREASE THE BALANCE OF YOUR MORTGAGE.

This is the main reason most loan modifications ultimately fail. Loan modifications are not a long term solution for anyone with heavy negative equity. However a loan modification may be a good solution for those who:

  • Have a stable financial situation (including steady employment) to support the new payment amount indefinitely
  • Do not have significant negative equity in the home, or;
  • Are prepared stay in the home for many years to overcome a heavy negative equity situation

If you have significant negative equity in the home and see yourself needing or wanting to move within a few years time, a loan modification is not likely to be a good solution for you. A failed loan modification or a forced or desired move in the near future will ultimately lead you right back around to the same choices you face today: Foreclosuredeed in lieu, or a short sale.

Minna Reid

Minna Reid is Broker/Owner of Reid Real Estate Group. Reid Real Estate Group is a full service Connecticut residential real estate brokerage, specializing in helping homeowners with legal and financial challenges including short sales, probate sales and tax lien complications.

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