Loan Modification Vs. Short Sale

When a homeowner becomes unable to meet their monthly mortgage

, they are stressed and may be unable to decide the best solution to their dilemma. At this point, the services of a loan modification attorney may help.

In the following scenarios, a loan modification may be the better solution:

- A homeowner has a temporary financial setback but wants to remain in the home.

-The homeowner(s) can demonstrate that the financial setback is temporary.

-The home is not upside down, that is the mortgage balance is not greater than the value of the home.

-The homeowner(s) can meet the income requirements.

Before signing loan modification papers, a homeowner should seek the advice of a loan modification attorney. Since these documents are complex and may contain legal verbiage and terms that are unfamiliar to the average homeowner, the price of the attorney fees may save thousands of dollars in the end.

A short sale may be the better option when the homeowner has a financial setback that they do not expect to be remedied quickly. Particularly if the home is upside down, that is the mortgage balance is considerably more than the value of the home, a short sale may be the best route.

Since a short sale is complex, most lenders will not permit a homeowner to conduct one themselves but require the home to be listed with a realtor. A comparative market analysis is conducted in order to determine a competitive listing price then a realtor of the lenders choosing performs an appraisal. The duration of the short sale depends largely on how quickly a qualified buyer is located and the seller may qualify for the HAFA, or Home Affordable Foreclosure Alternatives Program that can help with moving costs.

Both the short sale and the loan modification can have adverse affects on an individuals credit rating and although lenders may agree to not report derogatively to the credit bureaus, there is no guarantee that this will happen. However, a foreclosure has a more negative credit impact than either of these two options. Before deciding which route to take, a consultation with a loan modification attorney can be invaluable to a homeowner who is faced with the prospect of losing his or her home.

by: Loan Modification Attorney

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