Short Refinance

In today’s society, right in the middle of the housing meltdown, people must choose what to do their declining property value. Most people who bought their home do not want to lose it due to the investment and time they put in, however, the question arises, should I accept losing more or simply walk away from my home?

These are two factors that homeowners consider when they have lost equity; to sell it or just walk out so they can to limit their losses. Each of these decisions includes packing up and leaving one's home behind. These choices are not advantageous to the homeowner or the lender involved. Another way or alternative to think over, which could turn to be win-win for both sides and the country as a whole financially is: SHORT REFINANCING.

A Short Refinance, also known as a short payoff is similar to a short sale but you get to stay in your home. It is a refinancing transaction by a lender for a borrower who is currently in default to avoid foreclosure. The lender agrees to accept less than the current existing mortgage loan(s). This is done to avoid foreclosure and it is usually refinanced with a new lender.



The short refinance allows the homeowner to keep their home and simultaneously avoid a possible bankruptcy. If you don't have enough equity to refinance due to the mortgage crisis, a short refinance may be the solution.

In a short refi, homeowners do not have to be late to qualify, which is different than a short sale . If you are or have been late, ask me about a "short modification." In truth, there are many restrictions on the majority of refinance choices if you have been more than 30 days late on your mortgage loan. Borrowers may need to show evidence that there is a high probablility of not making their loan payment if the lender chooses to do nothing. As an example, a homeowner has a neg-am loan that will increase the payments to twice what they are paying currently, and you will surely not be able to make the new payment if it is not decreased.

For borrowers to qualify for a short refinance with their lender, you will need to demonstrate you have incurred a financial hardship, similar to a short sale. At times, it is not simple task to to sway a lender into reducing your mortgage debt if you can honestly afford to pay it. The banks and lenders are well informed that lots of borrowers would prefer to keep on paying the loan balance on their over-encumbered properties instead of messing up their good credit they fought so hard to get. Meanwhile, you need to also be able to show by documentation that you can comfortably make the newly proposed mortgage payments at the lowered loan amount.

The list of lenders accepting Short Refinances is increasing at a rapid pace. In January 2008, there were only 3 mortgage servicers and now the list has grown to over 10 major lenders. Moreover, there is pending legislation that may make Short Refinances more common and decrease the continuing risk of homeowners losing their homes to foreclosure.