Aren’t they the same in lowering payments??
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Just the way they are called. Most people refer to Home Loan as the primary mortgage you take to purchase a home. re-modification or refinance is used for loans that replace a current loan you already have just like you said to do things like lowering your payment or even lowering the term of the loan to pay it off quicker.
A remodification is where your current lender agrees to revise the terms of your loan. There may be a service fee for the mod, but not always.
A loan refinance means you are obtaining a completely new loan, it can be with your current lender or a new lender. Closing costs apply.
Typically, both lower your payments. But there is a significant difference between the two in cost to the borrower.
Yes, but the different
Loan modification when the home owner can’t make the original term payment agreement due to lost of job or laid off and the government forced the lender to do it in turn the government paying the fees to the lender.
Loan refinance is the home owner lower the payment volunteerily through lower interested rate set by market condition and the home has equity in it. The owner has to pay their own fee and point to the bank.
Loan modification is short term, refiance is for the life of the loan. Don’t do a modification unless you absoletely have to, because it impacts your credit.
Loan modification and refinancing are two great ways to lower a monthly mortgage payment. Most homeowners want to reduce their mortgage payment. Others, however, have no choice – they must reduce their mortgage payment to avoid foreclosure. The new government program, Making Home Affordable, provides two ways for financially struggling homeowners to lower their mortgage payments: loan modification and refinancing. now similarities
1) Same Goal: Lower Mortgage Payments
2) Refinance and Loan Modification Requirements
Recommendations:
Since mortgage refinancing involves a brand new loan, there is a significant amount of paperwork and required documentation to qualify. Lenders generally recommend refinancing to homeowners with higher credit scores who are up-to-date on their home loan payments. However, with the new government-back program, refinance is more streamlined and requires significantly less paperwork.
Since a loan modification simply changes the existing home loan, there is much less paperwork than with refinancing; therefore, modifications are generally easier and faster to receive. Lenders suggest loan modification to homeowners who currently have significant financial strain, are already be late on their home loan, and are unable to qualify for refinancing.