Loan modification
A permanent change to a mortgage's terms, such as a lower rate, longer term or added balance, to make payments affordable after a hardship. It is negotiated with the servicer and avoids refinancing.
Also called: loan mod, mortgage modification
Related terms
A temporary pause or reduction in mortgage payments granted by the servicer during a hardship. The missed amount is not forgiven and must be repaid later through a lump sum, repayment plan, deferral or modification.
The legal process a lender uses to take and sell a property after the borrower defaults. Some states require a court case (judicial foreclosure), while others allow a faster non-judicial sale under a deed of trust.
Replacing your current mortgage with a new one, usually to get a lower rate, change the term, or drop mortgage insurance. It comes with new closing costs, so the savings need to outweigh them.
A sale where the lender agrees to accept less than the amount owed on the mortgage. It needs lender approval, can take months, and is usually an alternative to foreclosure.
Paying a lump sum toward principal and having the lender recalculate your payment over the remaining term at the same rate. It costs far less than refinancing, but not every lender or loan type allows it.