As a lawyer practicing in New York City, I often ask homeowners whether they can sell their homes after receiving a loan modification. The answer is yes, but there are some important things to consider before doing so.
What is a loan modification?
First, it is essential to understand what a loan modification is. A loan modification is a change made to the lender's terms of a mortgage loan to make it more affordable for the borrower. This may include reducing the interest rate, extending the loan term, or even forgiving a portion of the principal balance owed.
Does a loan modification impact your ability to sell?
If you have received a loan modification, you may wonder if you can sell your home. The answer is yes, but…
To sell your home, you must pay off the remaining balance on your mortgage loan, including any unpaid interest and fees. And if the sale price of your home is less than the remaining balance on your mortgage loan, you will need to make up the difference out of your own pocket.
Some loan modifications also come with restrictions or requirements that may affect your ability to sell your home. For example, some loan modifications may require you to live in the property as your primary residence for a certain period before you can sell it. If you fail to comply with these requirements, you could be in breach of your loan agreement and subject to legal action by your lender.
It is also important to consider the impact of selling your home on your credit score. If you received a loan modification, it is likely that you were experiencing financial hardship and may have had late payments or even defaulted on your mortgage loan in the past. Selling your home may result in a loss, further damaging your credit score.
Don't try to figure this out alone
A loan modification can be a lifesaver, but it also presents some limitations. It is crucial that you consult with an experienced real estate lawyer who can help you understand all the decisions you need to make. The legal team at the Law Offices of Melvin Monachan can help you make an informed decision about whether selling your home is the right choice for you. Contact us today online or at (347) 389-1682.