What is the difference between a Loan Modification and Refinancing?
A loan modification is preferable to refinancing primarily due to the cost to the homeowner. Refinancing costs average between 3% and 6%. On a $150,000 mortgage, for example, the homeowner could pay between $4,500 and $9,000 for closing costs, attorney fees, points, appraisal fee, prepayment penalties of your current mortgage, and other costs associated with the type of mortgage you have. Additionally, you must meet credit check standards, the FICO score requirement, and the equity requirement. The timeframe to complete refinancing is at least the same as your original loan, though (with the current mortgage industry constraints) it will probably take longer.
