Archive for the ‘Ways to Avoid Foreclosure’ Category

In certain circumstances and for some homeowners, refinancing is a great idea to prevent foreclosure. Refinancing replaces your existing mortgage with a completely new one. There are many benefits to refinancing other than preventing and avoiding foreclosure. Refinancing could put you in a better financial position, especially if:

• You’ve kept up with current mortgage payments, but would like to lower your mortgage interest rate
• You have an adjustable rate mortgage with payments that could increase in the near future
• You have equity built up in your home (Even if you have little or no equity, you may still be able to refinance through Home Affordable Refinance Program.)

Home Affordable Refinance Program & Refinancing

Many homeowners don’t have enough equity to qualify for traditional refinance options. The federal government created the Home Affordable Refinance Program to give these homeowners an opportunity to refinance.
You may be eligible for the program if:

• You have kept up with your mortgage payments
• Your loan is owned or guaranteed by either Fannie Mae or Freddie Mac
• Your first mortgage amount is no more than 105% of the home’s current value

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You may have heard that one of the solutions to foreclosure is deed in lieu of foreclosure.

How does a Deed in Lieu of Foreclosure work?

With a deed in lieu of foreclosure, you have the option to voluntarily transfer ownership of your home to your mortgage company, if you cannot sell your home at fair market value or prefer to have your mortgage company sell your home.

How does a Deed in Lieu of Foreclosure help a homeowner?

A deed in lieu of foreclosure may release you from the obligation to repay your primary mortgage and may help you avoid a foreclosure sale, even if the foreclosure process has already started.

Benefits of Deeds in Lieu of Foreclosure

As the homeowner, you:

• Avoid foreclosure
• Avoid the hassle of court proceedings
• Can move on more quickly
• May be released from liability for the remaining balance on your primary mortgage

Please bear in mind that not every homeowner will be released from liability for the remaining mortgage balance. That is why it helps to consult an expert if you have a foreclosure problem.

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Question: With all the help available to prevent foreclosure, how can I take advantage?

My mortgage rate is fixed and I have no trouble making my payment but is there something I can take advantage of to make my mortgage terms even better.

Answer: Probably not unless you start missing payments or are heading towards a financial hardship. The best you might be able to do now with your current loan is call the bank and ask them what programs they could offer if you were expecting to start missing payments.

But anything they do to "help" you would probably do more to help the bank later on. If you can put off making some payments now, you might just end up having to pay back more later on as interest accrues.

There's very little chance they will modify the terms of the loan to make it more affordable for you. If you're on top of the payments, then they aren't in danger of losing money on the loan right now.

If you want a lower rate, you might be better off trying to get a refinance. That would help your credit, as well, by paying off one large mortgage loan with no late payments. But trying to work with your current lender just to get a lower rate or payments might result in unintended consequences that cost you more down the road.

Hope that helps. Good luck.