subject: Which Is Better, Short Sale Or Home Loan Modification? [print this page] With any passing day someone some where is trying to figure out how to save their home. There are a few different ways to actually stop foreclosure from taking place. As many as 6 million families are projected to face foreclosure in the next few years. Statistics indicate, 1 out of every 200 homes will be foreclosed on.
Two increasingly popular options that homeowners dealing with foreclosure consider are:
1. Short Sale
2. Home Loan Modification
The selling of a real estate property in which the sale proceeds are less than the balance owed on the property's loan is termed as a short sale. It mostly takes place when a borrower is not able to pay the mortgage loan on the property and the lender thus finds that selling the property even at a loss is better than harassing the borrower. This often proves to be beneficial to the borrower, because it prevents foreclosure. It should be recognized that this mutual agreement, however, does not necessarily release the borrower from his obligation to pay the remaining balance of the loan to the lender, and this remaining balance is often known as deficiency.
Home loan modification, on the other hand is an option for homeowners to lower their monthly mortgage payments by re-negotiating the conditions of the original loan. This is one of the best alternatives to short sale as it permits people in the midst of financial hardship to remain in and keep their home. By getting a new payment arrangement through mortgage modification people can avoid short sale and lenders still receive payments.
It is best for homeowners wanting modified terms to look for an experienced loan modification attorney, especially if the homeowner has not been able to make payments due to verifiable hardships.
One of the biggest mistakes that homeowners make is waiting too late to attempt to bargain a deal to save their home.
Special mortgage help programs such as Obama's Loan Modification Plan are designed to enable borrowers in distress to pay back debts by borrowing from designated banks participating in programs developed by the US Treasury. This can be a win- win situation for all concerned.
