newspaper headline of foreclosures
Text Size: Decrease Text Size Increase Text Size
Some people respond to foreclosure notices by going into denial because they do not want to face the reality that they could lose their homes. This is absolutely the worst thing that you can do. In fact, many people have been able to work with their mortgage lenders to refinance their loans even while the house is in foreclosure. This can help you save your home by reducing monthly payments so you can get your finances under control.

The Advantages of Refinancing while House is in Foreclosure

Variable interest rates have made it impossible for many otherwise responsible homeowners to make their mortgage payments, which can put their homes in jeopardy of foreclosure. When you refinance your house while in foreclosure, however, you have a chance to convert your mortgage to a fixed-rate loan with lower interest. This means you can lower your monthly payments and save money in the long run. It also means that you will be able to keep your home without filing for bankruptcy, which can leave a serious blight on your credit history that can last for up to ten years.

Who Qualifies for a Refinance Option while in Foreclosure?

Unfortunately, not everyone with a house in foreclosure will qualify for a refinancing option. Homeowners who have already paid a fair amount of their mortgage debt qualify for refinancing options while their homes are in foreclosure. Those who have paid 25 percent or more of their mortgage typically have a good chance of finding a refinance option. Anyone with less than 15 percent equity, however, will have a much harder time finding a lender willing to take this risk.

Refinance with HASP while in Foreclosure

Predatory lending practices, high unemployment rates and a global recession have greatly increased the number of foreclosures. The Obama Administration created the Homeowner Affordability and Stability Plan (HASP) to help mitigate the economic impact of foreclosures. Those who qualify for HASP assistance might have the option to refinance a house that is in foreclosure to make payments more affordable. Qualifying homeowners typically have a small amount of equity built up and spend more than 31 percent of their monthly incomes on housing costs. HASP also offers other assistance for those who qualify.

Refinancing while in Foreclosure

Before you decide to refinance your mortgage with another lender, you should consider contacting your current mortgage holder to review your options. They might be willing to help you refinance so you can keep your home and they can continue receiving regular payments from you. Be sure to contact several mortgage lending agencies, though, so you can get a deal that works for you. Don’t let the fear of foreclosure cloud your judgment. You might even want to consult an expert who works for an agency like Legal Aid to make sure you understand your rights.

TSC Sources and Resources

Comments / Post a comment

Post your comment