Facing Foreclosure? Refinancing May be PossibleBy Karen Lawson
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Foreclosure brings to mind abysmal images of financial desperation. Ideally, you will have contacted your lender for potential solutions prior to being notified that your mortgage loan is in foreclosure. If not, you may still have time to find a solution. Refinancing your mortgage can potentially give you a fresh start with a new mortgage that meets your budget. Your lender's ability to approve refinancing can depend on a variety of factors.
Know Thyself (and Thy Finances!)You've owned your home for a few years, and are facing financial difficulties such as unemployment, illness, or major home maintenance expenses. Many people are in trouble with rising mortgage payments due to upwardly adjusting interest rates. Before you contact your lender, you'll want to know your financial situation. What is your household income each month? What are your expenses? Do you have too much credit card debt? Do you have equity in your home? Once you've assembled this information, call your mortgage company. The longer you wait, the more difficult it will be to get help. Foreclosure is a costly process, and you will have to pay additional fees and costs once foreclosure starts.
How Refinancing Can HelpIf your lender cannot provide refinancing, you can ask for a period of forbearance to get refinancing elsewhere. It's important to be honest with your lender, and not to make false promises. In addition to your income, your mortgage lender will consider how long you've had your loan, your payment history, and the amount of equity you have in your home. If your problems are the result of adjusting interest rates, you may qualify for refinancing to a fixed rate or an adjustable rate mortgage with a lower initial interest rate.
About the Author
Karen Lawson is a freelance writer with extensive experience in mortgage banking. She holds BA and MA degrees in English from the University of Nevada. Reno.
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