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Refinancing After A Loan Modification

Refinancing After A Loan Modification

One of the questions homeowners sometimes have is whether it's possible to refinance after getting a loan modification. The short answer is conceivably, yes. Practically, though, it could be challenging.

Primary Lien Holder Or Mortgage Holder

It's usually up to the primary lien holder or mortgage holder as to whether a person will be permitted to refinance a home loan after obtaining a loan modification. If a homeowner hopes to consolidate his or her home equity loan into a single payment, this will require applying for refinancing to accomplish that goal.

Factors like how long ago the loan was modified and the level and quality of credit the homeowner has will determine whether refinancing a home loan into a sole consolidated payment is possible. A homeowner can contact his or her mortgage lender directly with borrower authorization and ask someone to explain the available options.

Refinancing 101

Before the current recession and downturn, refinancing a mortgage loan would have been a lot easier for a homeowner than trying to get a loan modification. However, with the altered economic state, refinancing a mortgage is now decidedly more challenging.

Banks should be willing to refinance mortgage loans if the homeowner has a reasonable amount of equity in the property, even after recent precipitous declines in home values. Banks seek approximately 20 percent equity in the subject property; strong credit; and solid, documented income to refinance a mortgage.

With lowered interest rates, refinancing is a good alternative for some homeowners. However, a majority of people find that it is not practical and available because they are upside down on their mortgages, owing more than their inflated properties are worth.

Loan Modifications 101

Loan modifications are more readily available today than in the past. This is because a great deal of resources at the national level are put behind programs that offer them. The purpose of these programs is to provide assistance to struggling homeowners in today’s challenging economy. Loan modifications are not an alternative available to all consumers, however.