Pros & Cons of a Short Refinance

A short refinance is one of several alternatives that allow both a lender and home owner to avoid foreclosure.  It is typically available for borrowers that are in default and involves creating a new loan amount than the existing outstanding balance owned.  The difference is typically forgiven by the lender.  Why would the lender agree to such terms?  Foreclosure is almost always more expensive for the lenders not only because of the physical costs but also because of the loss of payment / interest revenue during the process.



  • The borrower retains ownership of home
  • The mortgage balance is lowered
  • The interest rate is lowered
  • Equity is regained in home
  • Monthly payments are reduced



  • The borrower’s credit score is damaged
  • The process is time consuming
  • There is no guarantee
  • Qualification is required (usually requires Full Doc and Stated Income)

Leave a Reply

Your email address will not be published. Required fields are marked *