For someone who has taken a loan and is facing problems in returning it, terms like “Loan Modifications” and “Short Sales” are very important and useful too. The term “Loan Modification” indicates the changes made by the lender in the terms and conditions regarding the repayment of a loan, considering the abnormal financial conditions of the borrower. It may include reducing the amount of interest charged on the Principal amount of loan, reducing the amount of monthly installments paid by the borrower by extending the term of the loan. Sometimes, the lending institution may also blend the changes discussed above, to make the repayment of a loan easy for the debtor. These modifications are useful in almost every type of loan whether it is a mortgage loan, home loan or a personal loan.

“Short Sales” is an option for the people who are unable to repay their mortgage. An individual may find it impossible to afford his mortgage due to various situations like extended job loss, prolonged illness etc. This option helps the homeowners to repay their loan and also avoid the Foreclosure on their house. Every bank wants that the house of the borrower is sold at the best rate, so that their loss is shortened as much as possible.

To apply for a short sale there are a few steps which one needs to undertake. First, you need to find out exact value of your property. Second, you should calculate all the expenses which will be incurred in selling your property. Third, you need to sum up the amount of all loans taken against your property. Fourth, you will subtract the result of second step from the result of third. In fifth step you will talk to your lender and tell them about your inability to repay the mortgage and wish for a Short sale. After you get the written approval from the bank, you may sell the property.