Another terms thrown around a lot in loan modification discussions is Purchase Money vs. Nonpurchase money.
With most lenders, the difference between purchase money and nonpurchase money will have a large inpact on your ability to do a loan modification or a short sale.
Purchase money is money borrowed to purchase the home. Whether it was just a 1st loan or a 1st and 2nd loan, all of the borrowered money was used to purchase the home.
If you refianced your loan, either the 1st or the 2nd or if you obtained a Heloc loan and borrowered money againest the Heloc, than you have a Nonpurchase money loan.
Most lenders are less likely to agree to a loan modification or a short sale if you have a nonpurchase money loan. The reason for this is; you have taken money out of the home and used it for personal reasons.
If you have a nonpurchase money loan, a loan modification or short sale is going to be more difficult.
