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Which keep-the-house option fits you?
If you want to stay in your house, there are four main tools: refinance, loan modification, forbearance and reinstatement. They’re easy to mix up and they fit very different situations. Here’s a plain comparison. It’s the same one Ryan walks through on our refinance options page, and we make nothing on any of them.
This is general information. Your servicer’s programs and your loan type set the actual rules.
The four tools
Refinance. A new loan from any lender replaces your current one. You qualify fresh on credit, income and equity.
Loan modification. Your current servicer permanently changes the terms, such as rate, term or balance, after a hardship review.
Forbearance. Your servicer temporarily pauses or reduces payments. You repay the missed amount later.
Reinstatement. You pay everything you’re behind, including fees, in one lump sum.
Side by side
| Refinance | Loan modification | Forbearance | Reinstatement | |
|---|---|---|---|---|
| Who you work with | Any lender | Your servicer | Your servicer | Your servicer |
| Good when | Problem is over; strong credit and equity | Ongoing hardship; can afford a lower payment | Short-term hardship | You have the cash to catch up |
| Needs good recent payment history | Usually yes | No | No | No |
| Needs equity | Yes | Not usually | No | No |
| Credit effect | New inquiry and loan | May be reported | May be reported | Late payments stay |
| Timeline | 30 to 60 days | 1 to 3 months | Quick | Immediate |
| Cost | Lender closing costs | Usually none | Usually none | Arrears plus fees |
When each one fits
- Laid off, now rehired, with equity: reinstatement if you can, then maybe a refinance later.
- Permanent drop in income: loan modification.
- Medical leave for three months: forbearance.
- Behind and a sale date set: reinstatement or a modification with a postponement, and a backup plan to sell.
How to apply for a modification
- Call the servicer and ask for a loss mitigation application.
- Write a hardship letter: what happened, when, and why it’s temporary or permanent.
- Gather documents: pay stubs, bank statements, tax returns, a budget.
- Submit everything and keep proof you sent it.
- Follow up weekly. Missing documents are the most common reason for delay.
Federal servicing rules give borrowers some protection when a complete application is submitted early enough before a foreclosure sale. A HUD-approved counselor through the Minnesota Homeownership Center can help you with the application for free.
When none of these work
If your income can’t support even a modified payment, or you have no equity and the servicer says no, keeping the house may not be realistic. Then the question becomes how to protect what you can: a sale before the sheriff’s sale, a sale during redemption, or a subject-to structure. See facing foreclosure.
Our role
Ryan will give you an honest read on which of these looks realistic, point you to free counseling, and refer you to a lender if a refinance fits, at no fee to you. He’ll also show you what selling would net as a backup, so a “no” from the servicer doesn’t leave you without time.