Refinancing Foreclosure

When you put your home up as collateral for a home equity loan

, you know you may run the risk of foreclosure should you default on the monthly payments. This means that your creditors will have the rights to seize your home if you continuously fail to make due payments for a period of time depending on the agreement of your loan. If this happens to you, you do have the option to stop it from happening by refinancing foreclosure. Basically if you have received notice that your home is being considered for a foreclosure proceeding, you might want to take all the necessary action to stop the foreclosure from happening. You may be able to do that by refinancing your existing loan to reduce the monthly payments or extend the loan period to a longer term.

Refinancing foreclosure might be a slightly more difficult than regular refinancing due to the fact that you probably have low credit score to begin with because you have not been making due payments up to the point of facing possible foreclosure by your creditors. This does not necessarily mean that you cannot do anything to stop your creditors from seizing your home. Refinancing your home to stop foreclosure may be one of many solutions that you can opt for.

In order to know your options, you might want to consider contacting the lender of your existing mortgage to discuss if they would consider offering you a loan with longer term or lower interest rate. Both of these options might enable you to reduce the size of your mortgage and you might be able to pay off your mortgage more consistently. In the meantime it is advisable for you to try to improve your situation and use whatever source of money you have to catch up on your mortgage arrears.

Refinancing your home probably wont immediately stop your creditors from seizing your assets. So it may be a good idea for you to get in touch with a housing counseling agency approved by the Department of Housing and Urban Development (HUD) that might help you enroll in government services or programs that will save you from foreclosure.

Your current creditor may sometimes be your best refinancing option but there may be times when it would be better to see if other lenders have a refinance loan to offer you. However, you might want to make sure that you have improved your credit rating because it will be one of the things that potential lenders will look into in order to assess and determine the type of refinancing that they may offer you. So if you have fallen behind with your mortgage payments, now may be a good time to start improving your credit scores and paying off as many debts as you can.

If your credit score is below 600, you might have to seek out subprime lenders who specialize in loans for people with bad credit. They are experts in helping people who are on the brink of having their assets seized due to the fact that they have continuously failed to make all the required monthly payments. It might also be a good idea for you to consider lenders who are flexible in terms of your credit score. Some lenders might be willing to not judge you based on your credit score alone but they might choose to look at your entire credit history. If they see that your recent credit score slump is due to a single situation instead of bad financial habits they may give you the benefit of the doubt and offer you a good deal on refinancing loans.

Whatever your decision is, remember that you do have the right to negotiate until you can get an interest rate that you might actually be able to afford. The rule of thumb is to reduce your interest rate by up to 2%. So it may be better if you could negotiate your way to a much lower interest rate for your refinancing loan.

by: Ask Bill

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