Should I modify my mortgage?




Your lender wants you to accept an offer for a loan modification. But is it a smart choice?

A lot of my short sale clients have either declined a mortgage modification or been turned down for one by the time they have made the decision to move forward with a short sale.


In a mortgage modification the lender makes permanent changes to the terms of your home loan resulting in a more affordable payment. Keep in mind that while a modification will reduce your payment, it will not reduce the amount you owe on the property. In fact, in most instances the amount you owe on the loan will actually greatly increase the amount or length of your loan, especially if you have a HUD partial claim

This is the main reason most mortgage modifications ultimately fail. Loan modifications are not a long term solution for anyone who owes more on their home than their home could sell for (owners with negative equity). 

short sale with FHA

A lower monthly payment is only helpful until you have to sell. It is then that most realize they are upside down on their mortgages and can not sell without a short sale.


A loan mod may be a good choice if you:

  • Can not afford the current mortgage payments
  •  Wish to avoid Florida foreclosure 
  • Have a stable financial situation (including steady employment) to support the new payment amount indefinitely
  • Do not have significant negative equity in the home, or are prepared stay in the home for many more years to overcome a heavy negative equity situation

A loan mod may not be a good cHoice if you:

  • Do not have a stable financial situation and will still be at risk of future default
  • Owe much more than your home could presently sell for (or will after the modification)
  • Think there may be a chance you will want to relocate anytime in the next several years
  • The property needs significant repairs that you cannot afford
  • You are in the middle of a divorce with a co-borrower

A better alternative in tHESE situationS is almost always a short sale.

I want to thank you again for taking care of everything, I received stacks of letters from the two mortgage companies with threats and pleads for me to contact them and I ignored it and left everything in your worthy hands. The other realtor at the closing said that he was worried because usually short sales don't work out, and that this is his first successful one. I told him that I found you on google and I was told that you are the best in the state for short sales, and that you proved that to be true. A huge burden has definitely been lifted and all of the credit goes to you. Thanks again!


Last Updated on February 12, 2024 by Minna Reid


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