| e across America are increasingly being faced with a | | | | foreclosure refinance, and you can save your home |
| homeowner's worst nightmare: Foreclosure. The | | | | from the auction block if you act quickly. Again, this is a |
| possibility of losing your home to the bank is very real, | | | | rule of thumb. Sometimes, you may be able to get |
| and it's very normal to be scared and confused as the | | | | away with having a little bit less Equity, or a little bit less |
| process moves along. What's important is to keep a | | | | Value, and in some states you will need much more |
| cool head, don't panic, and evaluate your options as | | | | Equity and a much higher Value to qualify for a |
| early in the process as possible. Many people who are | | | | refinance in a foreclosure scenario. |
| approaching or are currently in a foreclosure do not | | | | If you have two mortgages, a first and second, you still |
| realize that they may be qualified to refinance while in | | | | may be eligible for a foreclosure refinance if you meet |
| foreclosure and save their home, mainly because by | | | | one or more of the following conditions: |
| this point in the process they have experienced | | | | 1. The Balances of your 1st and 2nd mortgages added |
| rejection and denial by their own lender and often | | | | together amounts to less than 70% of the Value of |
| several others. But if you have Equity in your home, | | | | your home. |
| you can refinance in foreclosure and get back on | | | | 2. Your 2nd mortgage can be "subordinated", or kept in |
| track to improving your credit. | | | | place while you refinance the 1st mortgage. |
| Refinancing in foreclosure is not like normal refinancing. | | | | I can't emphasize enough the importance of acting as |
| When you apply for a regular, or conventional | | | | quickly as possible to save your home through a |
| mortgage refinance, the most important thing a lender | | | | foreclosure refinance. The foreclosure clock starts |
| looks at when deciding whether or not to approve the | | | | ticking from the day on which you receive a notice of |
| loan is your credit and mortgage payment history. If | | | | default or on which you become 120 days past due on |
| you have not been more than 90 days late or behind | | | | your mortgage payments, and it can move very |
| on your mortgage payments, and your FICO credit | | | | quickly. While most foreclosures don't get to the stage |
| score is above 500, conventional lenders will look at | | | | of a property auction, sherrif's sale or trustee sale in |
| your refinance application and consider it. They may | | | | which you will lose your home until about 120 days |
| not approve it, but you'll at least get looked at. When | | | | from the recording of the NOD ( Notice Of Default ), in |
| you go beyond 90 days late on your mortgage | | | | many states this can happen much more quickly, as |
| payments, no conventional lender will review your | | | | fast as 60 days. While you delay, your mortgage |
| application, no matter how much money you make or | | | | company's payoff balance, the mount required to cure |
| how much better your situation is now than when you | | | | the default and prevent foreclosure, will increase as |
| fell behind. Once you are considered 120 days late or | | | | legal fees and interest pile up, eating away at your |
| behind on the mortgage, or your credit score falls | | | | Equity and robbing you of the ability to refinance out of |
| below 500, the conventional lending industry simply | | | | the foreclosure. It's easy to feel lost, almost paralyzed |
| cannot take the risks of lending to you anymore. If | | | | by the shock and fear of losing your home, but if you |
| you've been rejected for a loan during the foreclosure | | | | are serious about saving your home from foreclosure, |
| process, even before the notice of default was | | | | get on the phone and find a foreclosure refinancing |
| recorded, it is usually because you are over 90 to 120 | | | | specialist as quickly as possible. |
| days late or your credit score is under 500, or both. | | | | Don't forget, your first priority is to save your home, |
| You are now in a special situation, and banks don't like | | | | and a foreclosure refinance is considered a short term |
| "special". They just aren't set up for "outside the box" | | | | loan, usually with a fixed rate for 2 or 3 years. This |
| financing, no matter how much sense it makes, so their | | | | gives you enough time to get your credit back |
| response is to either deny your application, or in the | | | | together and refinance at the end of the fixed period |
| case of the lender who holds the mortgage on your | | | | into a much lower payment. Because you have shown |
| home which has fallen behind, they do the only thing | | | | your current lender, as well as the credit reporting |
| they can, foreclose on the home and force its sale at | | | | agencies and by association every other lender in the |
| auction to the highest bidder. | | | | country that you could not make the mortgage |
| In order to handle special situations like this, you need a | | | | payments in accordance with the terms of the loan |
| lender who specializes in refinancing foreclosures. | | | | which is in foreclosure, it's understandable that the |
| There are only a few out there, but you'll know one | | | | lender providing the foreclosure refinance is taking a |
| when you find one, because the first question they will | | | | substantial risk in lending you the money to prevent the |
| ask you is "If you had to sell your home quickly, how | | | | foreclosure, and the financing will not be at a very low |
| much would it sell for?", followed quickly by "And how | | | | rate. However, in most cases, the foreclosure |
| much do you owe on your first mortgage". This is | | | | refinance loan's payments are Interest Only, and will be |
| because they are trying to establish how much Equity | | | | lower than the payments on most forbearance, or |
| you have in the property. Equity for these purposes | | | | payment agreements, which your lender may have |
| can be calculated easily: | | | | proposed or enrolled you in prior to filing for |
| A) Just subtract the Balance of your first mortgage | | | | foreclosure. And if you consolidate high interest debts |
| from the Value of your home. | | | | like credit cards and personal loans, payoff judgments, |
| B) Take that Number and divide it by your property | | | | and clear away liens, you can potentially free up a lot |
| Value (there's that word again), | | | | of cash flow from your monthly budget and begin |
| C) Multiply by 100 and you've got your gross Equity | | | | improving your credit score with a clean slate. |
| percentage. | | | | Don't waste time talking to lenders and brokers who |
| Because your credit and mortgage history cannot be | | | | don't know the foreclosure refinance process inside |
| considered for the purpose of qualifying you for a | | | | out, there are simply too many out there who will just |
| foreclosure loan, foreclosure refinancing is all about | | | | waste your time and money trying to learn how to get |
| Equity. Lenders specializing in foreclosure refinancing | | | | your foreclosure refinanced while you slide closer and |
| will routinely request that you order an appraisal and an | | | | closer to a sale date and the real possibility of losing |
| additional appraisal review performed by a realtor, | | | | your home. On the other hand, the right lender can help |
| commonly referred to as a BPO or Broker Price | | | | you lay out other options to save the equity in your |
| Opinion. | | | | home even if you don't qualify for a foreclosure |
| Here's a general guideline: If you have 35% or more | | | | refinance. Find a special lender for your special |
| Equity in your property, and your property is Valued at | | | | situation, and you will have a fighting chance of |
| $200,000 or more, you are probably qualified for a | | | | refinancing in foreclosure and saving your home. |