How to Refinance to Prevent Foreclosure
If you're exploring options to prevent a foreclosure on your home, consider refinancing it. While it's not the answer for every situation, it can be a viable solution for people who have experienced a drop in income or have encountered some unexpected debt. Before you give up the keys to your home, have a conversation with a mortgage lender about a refinance.
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Instructions
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Start planning a refinance as soon as your problems begin. You're much more likely to get approved if you apply before you're 30 days delinquent on your mortgage. Once you reach 60 days past due, your chances of approval are much less.
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Ask your current lender if they offer a deferred payment mortgage. Some lenders will refinance your existing mortgage into a loan that requires no payments for 90 days. If your financial problems are temporary in nature, this may be all you need to get back on your feet.
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Sit down with a mortgage lender and review the terms of your existing loan and see what they can offer on a new mortgage. If the current interest rates aren't low enough to significantly lower your payment, you may have to extend the term of your loan to get that payment down.
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Stay in touch with your current mortgage lender throughout the refinance process. You're much more likely to prevent foreclosure proceedings from starting if you keep them aware of your situation and they know you're trying to take care of the matter.
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Tips & Warnings
If you have equity in your home, consider doing a cash out refinance to pay off credit card debt or medical bills. Consolidating debt is a good way to reduce your overall monthly expenses while freeing up some of your income.
When refinancing a mortgage for any reason, it's always good to shop around. Terms and interest rates vary from one lender to another, so talk to several to make sure you're getting the best deal.
