Banks have tightened underwriting requirements for home refinances due to most recent mortgage crisis. Thus making it difficult for borrowers to replace a risky home loan with a stable one. However, traditional mortgage rate have gone down significantly recently and that has gotten many homeowners who are going through foreclosure a false sense of hope. Those homeowners believe that because mortgage rates have gone done they would be able to take advantage of those lower rates when they try to refinance.
But homeowners in foreclosure generally can not refinance the mortgage with their own lender or any other lender, they are considered very high risk, which means they’ve had several months of missed payments.
The only viable options to homeowners facing foreclosure is a loan modification, or selling their home. A loan modification either which temporarily or permanently changes the loan’s terms, making it more affordable for you to stay in your house.
Programs such as the Making Home Affordable (MHA) initiative includes several avenues that help borrowers in many different situations. For example, there is a program for people who can demonstrate a financial hardship, including those in foreclosure. The unemployed, underemployed and those who are upside-down on their property, may obtain affordable loan terms through modification. To be eligible for these program the borrow must show proof of sufficient income to support the modified payment. A borrower may modify through his or her existing lender if it participates in MHA, or find another lender who does.
Try to get your loan(s) modified, if you desire to stay in your home. Remember that loan modification is a process and you must start early. You do not want to wait a month before your house is scheduled to be auctioned to begin the loan modification process.