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Loan Modification Articles

What’s The Difference Between A Loan Modification And Refinance?

ByJoshua Denbeaux March 22, 2023February 10, 2025

If you are struggling to make your mortgage payments, you may feel like you’re in a hopeless situation. Still, it’s important that you know you may have other options available to avoid your home being foreclosed on.

Two of the most common options provided for people struggling with mortgage payments are loan modifications and mortgage refinancing. Depending on the details of your situation, one option might be a lot better for you than the other.

If you’re struggling to make your mortgage payments and are looking to make a change to avoid foreclosure, it may be in your best interest to consult an experienced mortgage attorney first. Joshua Denbeaux is a mortgage lawyer who has represented thousands of New Jersey homeowners through mortgage and foreclosure issues. If you are looking to make a change to your mortgage, contact Denbeaux Law today to learn more about how we may be able to help you. 

What Is a Loan Modification?

A loan modification is a change to your current loan term. To get a loan modification, you have to apply through your current mortgage company. If your application is approved, there are a variety of ways your mortgage could change. A loan modification can lower your interest rate, extend the term of your loan, change the principal of your loan, or lower your monthly payments. 

What Is a Mortgage Refinance?

In any situation where you refinance a loan, you are essentially paying off your loan by replacing it with another one. For refinancing your mortgage, you don’t have to stay with your current mortgage company and can choose to work with any company you’d like. 

Mortgage refinancing doesn’t require you to prove financial hardship in order to qualify, but you do usually need to be able to demonstrate that you will be able to repay the new loan. A mortgage company typically won’t consider refinancing your mortgage if you aren’t current on your mortgage payments. 

Mortgage Loan Modification vs. Refinance

There are a lot of reasons that someone might consider a loan modification over a mortgage refinance and vice versa. You may be left wondering what the difference is between refinancing and loan modifications and which is right for you. The best option depends on the specific details of your situation.

Loan Modification

A loan modification can be a faster process than a refinance because you are able to work with your current mortgage company who you already have a relationship with. However, a loan modification could also lower your credit score, and it will make you unable to take out other lines of credit. Depending on what you need to change about your loan or your current financial situation, a loan modification may or may not be a good idea for you. 

Refinance

Mortgage refinancing allows you to shop around and choose which mortgage company you want to work with on your new mortgage. If you choose to refinance your mortgage, you’ll also still be able to take out other credit if you need it. 

It’s important to note that if you choose to refinance your mortgage because it’s a new mortgage, you will have to pay closing costs on your home again. You can qualify for a refinance after a loan modification. Mortgage refinancing can be harder to qualify for and will typically take longer than a loan modification.

Understanding the differences between a mortgage loan modification and mortgage refinancing is one thing, but figuring out which one is best for you is quite another. One of the best ways to determine which option is better for you is to consult a reliable mortgage attorney.

Get Help From a Mortgage Defense Attorney

If you are in need of a change to your mortgage to help you avoid foreclosure, you may have a variety of options available for you to choose from. Consulting an experienced attorney can help you determine the best option for your specific situation. 

Meeting with an attorney before you begin applying for or making changes to your mortgage can help ensure that you’ve explored every possible option. Contact Joshua Denbeaux today to learn more about refinancing, loan modifications, and other mortgage resources.

Joshua Denbeaux

Attorney

Joshua Denbeaux is a Partner at Denbeaux & Denbeaux, concentrating his practice on financial consumer rights issues and foreclosure defense. He has substantial experience in legal matters related to foreclosure, loan modification, debt collection, and the prosecution of cases related to predatory lending. Mr. Denbeaux received his law degree in 1994 from Seton Hall University after completing his undergraduate work at The College of Wooster. Mr. Denbeaux is licensed to practice in the United States District Courts for New Jersey.

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