Loan Modification or Short Sale?
A common question asked by homeowners struggling to make their mortgage payments is which is better, a loan modification or a short sale. Knowledgeable Metro Atlanta Short Sale Realtors will generally agree that there is no right or wrong answer to this question. The answer depends on the homeowner's particular circumstances and can be impacted by a variety of factors including the balance owed on the mortgage, the value of the property, and the future outlook for property values in the neighborhood.
A loan modification involves changing one or more loan terms to make the loan more affordable for the homeowner. If you are applying for a loan modification, one of the questions you should ask is whether the loan modification will include a principal reduction. This is an important question, especially if your property's value has decreased significantly over the past few years.
If your property's value has decreased by 30-40% or more, then a loan modification without a principal reduction may not be the best decision. This is particularly true if you live in a neighborhood that is unlikely to rebound from the real estate crisis for many, many years to come. Why would you want to continue throwing good money after bad if the chances of recovering your home's lost equity is unlikely, if not impossible.
Under these circumstances, a short sale may be the best choice. A short sale will enable you to walk away from the debt, often with no threat of a deficiency judgment. A short sale will relieve you of the burden of paying a mortgage on a home that is worth substantially less than you owe the mortgage company.
On the other hand, if your property's value has declined by less than 30% and property values are likely to rebound fairly quickly as the real estate market improves, then a loan modification, even without a principal reduction, may be the right choice for you. However, you must be realistic in your evaluation of your neighborhood as well as your evaluation of the terms of the loan modification being proposed by your lender. If you know that you cannot afford the new mortgage payment, a short sale might be a better option.
If you have questions about short sales or would like to schedule a no obligation consultation, please give me a call at 678-446-5925.
A loan modification involves changing one or more loan terms to make the loan more affordable for the homeowner. If you are applying for a loan modification, one of the questions you should ask is whether the loan modification will include a principal reduction. This is an important question, especially if your property's value has decreased significantly over the past few years.
If your property's value has decreased by 30-40% or more, then a loan modification without a principal reduction may not be the best decision. This is particularly true if you live in a neighborhood that is unlikely to rebound from the real estate crisis for many, many years to come. Why would you want to continue throwing good money after bad if the chances of recovering your home's lost equity is unlikely, if not impossible. Under these circumstances, a short sale may be the best choice. A short sale will enable you to walk away from the debt, often with no threat of a deficiency judgment. A short sale will relieve you of the burden of paying a mortgage on a home that is worth substantially less than you owe the mortgage company.
On the other hand, if your property's value has declined by less than 30% and property values are likely to rebound fairly quickly as the real estate market improves, then a loan modification, even without a principal reduction, may be the right choice for you. However, you must be realistic in your evaluation of your neighborhood as well as your evaluation of the terms of the loan modification being proposed by your lender. If you know that you cannot afford the new mortgage payment, a short sale might be a better option.
If you have questions about short sales or would like to schedule a no obligation consultation, please give me a call at 678-446-5925.
I like this post short but meaningful and helpful. thanks for sharing and i'm looking forward to you next post.
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Loan Modification is the right choice. Many attorneys of Chicago Loan Modification knows that this is the right move to make.
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