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Short Refinance

How does this program help me?

A short refinance is where you refinance your house for less than what you owe on it. What happens to the portion of the loan that you couldn't get refinanced? You hope your current lender will forgive the remaining balance.

The idea is that your current lender gets some of it's loan balance paid off in your refinance so at least your lender gets some of it's money. The question is: Does your current lender think this is a better option for them financially? Is doing a short refinance cheaper than a possible foreclosure?

Sometimes a lender will not forgive the debt but they will still agree to let you do a short refinance. After you close the new loan they will put a 2nd mortgage on your house for the portion that you still owe them. Of course, this only makes sense to you if the payment on your new 1st and 2nd loan will be lower than the payment on the one loan you had.

It is important to know that this loan program won't work if you have gone late on your house payments already (it will be difficult to get a bank to do a refinance for you). If you have gone late on your payments you will need to look at the Hope for Homeowners program.

Who should I contact?

Technically, any lender or mortgage broker can do a short refinance. The hard part will be finding someone that wants to handle this type of loan. These loans are complicated, time consuming, require more work and often times don't close. You will need to make quite a few phone calls. We recommend starting locally. Call local lenders and ask them if they will process a short refinance for you. After that move up to the internet.

What should I expect?

You will need to have patience. It is a very complicated, hands on process. It could take 60 to 90 days depending on how busy the company is that you choose to do your loan. Be sure to check out our resources section for a list of personal financial documents to get together.