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Save Your Home With Foreclosure Refinancing
Nobody wants to lose their home, but if you’re facing foreclosure, you may feel like you don’t have any options. Before you accept the drastic measures of bankruptcy, or worse, losing your home, make sure you consider all possible options. One that is worth pursuing and that could save your home is foreclosure refinancing. Learn how refinancing could help you and where to get the process started.
Common Causes for Foreclosure
Many different circumstances create the financial woes that eventually lead to foreclosure. The most obvious is a loss of income, usually related to the loss of a job. Many Americans don’t have enough savings to support them for more than a month or two without income, if even that, and that leads to missing mortgage payments. Another factor in financial trouble is often an unexpected illness that can cause both the loss of a job and overwhelming medical expenses. And, of course, there are those subprime mortgages and adjustable rate mortgages (ARMs) that we’ve all been hearing so much about lately. Whatever the cause of your looming foreclosure, refinancing may be an option.
How Refinancing Can Help
How you choose to refinance your mortgage often depends on what kind of a financial situation you are currently dealing with. A new mortgage can’t always stop foreclosure, but you’ll never know if you don’t investigate further.
When You’ve Experienced a Loss of Income
If you don’t have money coming in, finding the means to pay your monthly mortgage payment can be extremely difficult. If you simply don’t have the funds, then a mortgage refinance may not help you. However, if you do have some money saved up, but not enough to cover your current monthly payment, a refinance could be the solution. Getting a new mortgage with a lower interest rate and/or longer terms can reduce your monthly mortgage payment to a level that you can handle and help you avoid foreclosure while you get back on your feet.
When You Have a Subprime Mortgage
If your original mortgage is a subprime mortgage, then you most likely have a high interest rate that may be making that monthly payment hard to pay. A home loan refinance offers the opportunity to lower that interest rate, make your payments more affordable, and prevent foreclosure. There are some good government-sponsored programs available today to help homeowners in this situation. Talk with your current lender or another lender to understand your options.
When You Have an ARM
Deciding to refinance an ARM can be a great solution to dealing with fluctuating interest rates and monthly payments that continue to increase, causing you to be vulnerable to foreclosure. Refinance your ARM to get a fixed rate and get rid of those changing rates that threaten your ability to keep up with your payments.
Where to Refinance and Stop Foreclosure
You have a couple options when it comes to refinancing your home loan. There are plenty of lenders out there who you can refinance with, but when you’re dealing with the possibility of foreclosure, it’s often good to start with your current lender. If you feel you simply won’t qualify for any type of loan, you may still be able to get help with an FHA Secure loan, a loan modification or some other type of workout with your lender.
The Lender of Your Current Loan
When foreclosure is what is causing you to refinance, the first thing you should do is pick up the phone and call your current lender. Believe it or not, they want to help you avoid foreclosure too. It is a very costly process for them and their first priority is going to be avoiding financial loss. They will attempt to work with you to find a solution that works for both of you. Before you let them take your home, give them the opportunity to help.
Other Lenders that Refinance
Though it may be a little harder to convince a new lender to refinance your mortgage, it is a possibility that you want to investigate before you succumb to foreclosure. Another benefit of checking with other lenders? They may offer you a better rate than your original lender. The most important factor here will be how much equity you have in your home – you have a lot of equity, your chances are good; however, if you have very little equity (i.e. your mortgage balance is very close to your home value) you won’t have much success with a refinance, and your time is better spend contacting your current mortgage lender.
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Average Mortgage Rates
| program | apr |
|---|---|
| 30 Yr Fixed | 5.24% |
| 15 Yr Fixed | 4.77% |
| 30 Yr Fixed Jumbo | 6.07% |
| 15 Yr Fixed Jumbo | 5.61% |
| 3/1 ARM | 4.97% |
| 5/1 ARM | 4.4% |
| 7/1 ARM | 4.6% |
| 10/1 ARM | 5.1% |
| 3/1 ARM (I/O) | 5.54% |
| 5/1 ARM (I/O) | 4.36% |
| 7/1 ARM (I/O) | 4.75% |
The FHA Secure Loan
You’re not alone when it comes to facing foreclosure and dealing with financial woes. That’s why the FHA Secure loan was created. It is specifically designed for people who are having trouble paying their monthly payments due to an adjustable rate that recently reset to a higher rate. There are some requirements to the FHA Secure loan that you must meet to qualify that include employment, ability to pay the new loan, and a history of making payments in full before your rate reset. If you think you might qualify for this type of refinance loan, check with a lender who offers FHA loans.
You do have options before allowing the bank to foreclose on your home, and one worth looking into is a mortgage refinance. You just may save one of your most important possessions: your home.
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