What is a Short Sale and Loan Modification?

Homeowners who are struggling financially and unable to make their mortgage payments may wonder what, if any, solutions are available to them. Although filing for Chapter 13 bankruptcy might at first seem as though it would be a viable way to avoid foreclosure, it may not always be the best financial solution. Depending upon your personal situation, there are two other solutions that can be utilized. These two solutions are loan modifications and short sales.

Loan Modification

The process of modifying a loan can be successfully used for homeowners who are facing foreclosure, but who wish to keep their home. By modifying your mortgage loan, you will be able to permanently change the terms of your loan. Through this method, it is possible for the mortgage to be reinstated and for more affordable terms of the loan to be arranged. Such term changes may include negotiating extensions for payments, more favorable interest rates, extending the term of your mortgage loan, working out a reduction in the balance of the mortgage, waiving accrued interest and substituting a fixed interest rate for an adjustable interest rate.

Through these effective loan modification strategies, it is entirely possible to lower your monthly mortgage payments to an amount that is more affordable, allowing you to breathe easier financially and remain in your home while avoiding foreclosure.

It should be noted that loan modifications have become increasingly common in the last few years in light of the economy and housing crisis. Even so, it is crucial that you fully understand what is involved in modifying your loan so that you may make an informed decision regarding whether this is the best option given your current financial situation.

Short Sales

In some instances, modifying the mortgage loan may not be the best solution. This most commonly occurs when the value of the home is less than the balance on the mortgage loan. For homeowners who have witnessed the value of their home decline during the housing crisis and who now find themselves underwater on their mortgage, an alternative solution could be a short sale.

A short sale allows the home to be sold at an amount that is discounted from the current balance in order to reflect the home's true market value at the current time. This makes it possible for the home to be sold and the proceeds of the sale to be used to pay the lender. Ultimately, it is possible to negotiate with the lender for the remainder of the debt balance on the mortgage loan to be written off.

In determining which option is right for you, it is crucial to consider your current financial situation, whether it is feasible for you to remain in your home given your finances and the value of your home in the current market. Speaking with an experienced short sales or loan modification legal expert can often provide in-depth information that can help you to arrive at an informed decision regarding which option may best serve your personal needs.

If you are currently behind on your mortgage and you are facing foreclosure, or even if you are simply finding it financially difficult to meet your mortgage payments each month, it is crucial that you consider the options available to you. There are other solutions available to assist you in keeping your home and or removing yourself from the burden of your mortgage while avoiding the stigma of foreclosure and bankruptcy. Short sales and loan modifications are just two such options that are available to assist homeowners struggling with the burden of a heavy mortgage payment.

For bankruptcy and loan modification solutions in Westchester County and New York City New York visit our site at http://www.whiteplainsnybankruptcyattorney.com/

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