It is first important to understand the difference between refinancing or modifying your mortgage. When you refinance, you are paying off your current mortgage and obtaining a new mortgage. Whereas a mortgage modification is where you keep your current mortgage but change its terms.
Refinancing is generally a better option than a modification if you are not underwater on your mortgage. Refinancing can lower your interest rate, change the length of your mortgage term, change your lender, or you could receive a cash loan based on the equity of your home. If you have no equity in your property, then you probably will not be able to refinance, but you might be able to modify your mortgage.
You may want to consider a modification if you cannot refinance, you want to keep your current mortgage, you are in danger of falling behind on mortgage payments, you already fell behind on mortgage payments, you are not eligible to refinance, or you are facing a financial hardship that impacts your ability to repay your mortgage.
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