Refinance, Short Sale and Loan Modification

What to do if you are struggling with loan payments or if you want to reduce your payments. What is “Home Loan Assistance”?

Home Loan Assistance can come in different forms such as refinance, short sale and loan modification. Depending on your situation, you may qualify for one or more of these programs.

Traditional Refinance

If you’re current on payments and have equity in your home, a refinance could help you take advantage of today’s low interest rates.

A refinance could help you:

  • Lower your interest rate
  • Save on monthly payments
  • Change the term of the loan
  • Switch from an adjustable rate to a fixed rate
  • Consolidate debt
  • Refinancing fees apply.

Making Home Affordable Refinance (Federal program)

If you can’t take advantage of a traditional refinance, you could qualify for refinancing through the federal government’s Making Home Affordable Program.

You could qualify for a Making Home Affordable refinance if:

  • You have a Fannie Mae or Freddie Mac mortgage loan on your primary residence, second home, or investment property. Please contact Fannie Mae at 1-800-7FANNIE or Freddie Mac at 1-800-FREDDIE if you are unsure.
  • You owe no more on your first mortgage than 105% of your home’s current value. (Example: you owe $105,000 on a home with a current market value of $100,000.).
  • You are current on your existing mortgage.
  • You are interested in a new fixed or adjustable loan at current low rates. Refinancing fees apply.

You can learn more about the federal government’s Making Home Affordable Programs at

Making Home Affordable Modification (Federal Program)

If you are behind on payments, or are having difficulty making your payments, you could qualify for a free loan modification through the federal government’s Making Home Affordable program.

You could qualify for a Making Home Affordable loan modification if:

  • You own and occupy your home as your primary residence.
  • You are either current, at risk of imminent default, or behind in your mortgage payments, or are in foreclosure or bankruptcy.
  • The unpaid principal balance of the first mortgage on your primary residence is $729,750 or less (loan limits are higher on owner-occupied multi-unit properties).
  • You have verifiable source(s) of income to put towards a mortgage payment each month, even if that income has recently been reduced.
  • You can provide copies of your most recent tax returns and will sign an affidavit of financial hardship.
  • You have not previously modified your mortgage under the Making Home Affordable program.
  • Mortgages on second homes, vacant homes, and investment properties are not eligible for modification under this program.

You can learn more about the federal government’s Making Home Affordable programs at

Assistance through other programs (such as repayment plans, short sales and modifications)

Repayment Plan

A repayment plan allows you to make a regular payment plus a portion of the amount past due each month over a period of months. This option is based on financial information you provide and you may be required to make a deposit toward the amount past due.

Loan Modification (through your current lender)

This option is commonly used when there has been a temporary reduction in income or an increase in expenses. An effective loan modification could lower your monthly mortgage payment and cure any delinquencies on the account. Contact your mortgage company for details.

Short Sale

Some homeowners having difficulty making their mortgage payments decide their best option is to sell their home. If you decide to sell your home and the market value of your home is less than what you owe on your loan, a short sale could be an option for you.

In a short sale situation, your lender may agree to accept less than the total amount due on the loan to avoid foreclosure.

Things to think about with a short sale:

  • You could be asked to make a contribution to help reduce the total loss.
  • You must list the property for sale at fair market value with a real estate agent who must forward any offers to your lender for consideration.
  • Acceptance of any offer will be subject to bank approval.
  • Your agent’s commission may be limited by your lender.

Deed In Lieu Of Foreclosure (DIL)

If you’ve tried all available options and you’re still unable to sell your house, you may be able to sign the property over to your bank. To do so, you must have clear title to your home with the exception of your first lien.

Beware! Protect yourself against home rescue scams

Loan modifications are free; there’s no charge to you. Therefore, we urge you to beware of foreclosure rescue scams that charge a fee. Learn more about these scams at .

For valuable information about avoiding unnecessary foreclosures, the options available to you to help you keep your home, and how to avoiding scams, contact the FDIC at 1-877-ASK-FDIC (1-877-275-3342) or go to .

Some of these programs may have legal and tax implications. Consult with an attorney or CPA for more information. Your trusted real estate agent will be able to refer you.

Please feel free to contact the Brooks and Heinze Real Estate Team in Seattle, WA for further information.

Kerstin G. Brooks
Brooks & Heinze Team

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