What is the difference between a refinancing and a loan modification?
To your normal consumer, the two may appear similar. A loan modification is when you’re trying to rework or restructure a loan with an existing bank. Let’s use the example of having a mortgage with Bank of America, becoming delinquent or behind on that mortgage and wanting to re-work or restructure that loan with Bank of America.
Let’s contrast that with a refinance. A refinance is when you get a loan from a new bank, let’s use the example of Chase Bank and you speak with Chase Bank, get a new loan to then buy out the Bank of America loan. Now instead of paying Bank of America on a monthly basis, you’re paying Chase on a monthly basis.