Foreclosure Refinancing

Foreclosure refinancing can help homeowners avoid losing their home if they have recently become default in mortgage payments. This often happens when people have taken on unexpected financial burdens or have been laid off from a job. Fortunately, there are a variety of refinance options to help homeowners. Before they pick the right one, homeowners should take the time to pray for God's direction. "Lead me, O LORD, in thy righteousness because of mine enemies; make thy way straight before my face" (Psalm 5:8).

Foreclosing can be an expensive endeavor for a bank to pursue, so before seeking foreclosure refinancing elsewhere, consumers need to check with their bank to see if there are any available options for amending the current terms of their loan until things improve financially. Some lenders may be willing to temporarily suspend proceedings if the homeowner agrees to a repayment plan in which payments are more than the regular mortgage payment for several months to catch up.

Since many people do not have the funds to pay extra payments monthly, a different option with the lender is a Loan Modification. Basically, all of the default payments are added to the end of the loan or distributed across the span of the loan, making the immediate impact upon the borrower's finances minimal. Consumers simply begin making normal mortgage payments again just as before. Loan Modification is an option that can only be exercised once during the term of the loan.

Homeowners who are unable to work with the current lender to avoid foreclosure must evaluate other foreclosure refinancing options. First, they must decide whether or not the home should be held on to. The homeowner needs to anticipate being able to afford mortgage payments in the near future. If it seems hopeless that they will be able to again financially manage a mortgage in the near future, it is probably best to avoid the expense of a refinance loan which will only increase and delay debt problems if the financial situation does not improve. Generally, a mortgage should be no more than 40% of one's gross monthly income. Those whose mortgage is considerably out of pace with their current income might want to sell their home and use the funds to pay off the default loan.

Another option homeowners could consider involves using some of the equity established in the home to take out a second loan or home equity line of credit. These funds can be used to bring the first mortgage up to date. The homeowner will then be responsible for two mortgage payments. Becoming default on either will place them at risk of the lender foreclosing again; however, foreclosure refinancing in this way provides additional funds at lower interest rates than one might otherwise find.

Other options require homeowners to enlist the services of an attorney or foreclosure bailout service. Specialists can negotiate with their lender to settle or roll-over the loan. These services offer a variety of foreclosure bailout options depending upon the homeowner's current situation. Seeking professional legal advice can help them avoid or manage a way through a looming foreclosure.

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