Finance
In Colorado, a 'loan modification' differs from a 'refinance' in that:
AA. Both require new lender approval and new closing costs
BB. A loan modification changes the terms of an existing loan with the same lender (often to avoid foreclosure), while a refinance replaces the existing loan with a new one✓ Correct
CC. A modification is for new loans only
DD. A refinance is for distressed borrowers only
Explanation
A loan modification permanently changes the terms of an existing loan — often the interest rate, term, or principal balance — with the same lender, without closing costs and without replacing the existing note. Modifications are often used to make loans affordable for distressed borrowers. A refinance pays off the existing loan and replaces it with a new loan, involving new underwriting and closing costs.
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