Mortgage Refinance - Will it Work For You?

Mortgage refinance has received a lot of press lately. With millions of home foreclosures taking place, it is no wonder that homeowners are seeking assistance wherever they can find it. And with that being the case, mortgage refinance is often the first option they explore. Add on to this, the massive advertising campaigns that are bombarding homeowners, and one can see how enticing this option may be for those in financial trouble. But is this the best course of action? Can mortgage refinance keep you out of bankruptcy or prevent home foreclosures?

It is good to start with the truth: a home loan mortgage refinance is not the same as a home loan modification plan. Homeowners often confuse the two, thinking that one is the same as the other, and that is simply not the case. The differences between a mortgage refinance and loan modification can be dramatic and can have long-standing ramifications on the homeowner. Choosing which is best is an important consideration for any homeowner.

A mortgage refinance plan, normally, allows homeowners to take equity (cash) out of their home and to have this cash loan re-valued into a new loan structure. Many American homeowners took advantage of these programs believing that the value of their homes would increase or at least stay the same as it was when they took out the new re-financed mortgage. As we all know, this did not happen. Many homes lost value over the last few years and the spread between the value of the home (appraised value) and the amount the homeowner had put into the loan (equity) decreased.

In addition, many homeowners discovered that their monthly payments went up drastically when hidden rates took effect on these loans. In many cases, it was the increase in the monthly payments that led these same homeowners to lose their homes when they realized that they could not make these payments.

A home loan modification is different. Home loan modification plans work at the source, normally the bank that holds your mortgage. In a home loan modification plan, you and the bank work out a new loan structure that will allows you to make decreased payments, perhaps over a longer period of time, while keeping your home. In addition, if done right, these modifications will allow you to keep your credit rating strong.

The main issue with home loan modification plans is that you need to know what you are doing before you reach out to the bank. Until you know what your rights are under the law and until you know what steps to take, you are often working blind and that can lead to disappointing results.

If you are at risk of losing your home to foreclosure, take some time to explore the differences between a mortgage refinance option and a home loan modification. The time you spend on this can actually save your most valued asset...your home.

Avi Cahn Professional Real Estate Investor Professional Mortgage Broker Loss Mitigation Expert http://www.bankmortgagesecrets.com 1 (877) 620-0838