How to Avoid Foreclosure by Refinancing

Avoid foreclosure by refinancing your mortgage.

If you're facing foreclosure, you probably feel scared of losing your home and desperate to save it. This makes you a prime candidate for scam artists who are only out to take your money. If you want to avoid foreclosure by refinancing, you should talk to legitimate sources only. If you've been a good customer in the past and have only struggled recently, your bank may work with you to refinance. You can also use government programs that help homeowners avoid foreclosure.

Instructions

1. Talk to your mortgage lender to discuss your options. Your lender may be willing to work with you through refinancing or loan modification. The company may decrease your interest rate or lengthen the loan term without any government help.

2. Talk to a HUD-approved foreclosure avoidance counselor. The U.S. Department of Housing and Urban Development (HUD) offers free counseling services to those who want to avoid foreclosure.

3. Determine whether you qualify for federal help. You cannot get grants to save your home, but the government will help you work with lenders to make your home more affordable. For example, through the Making Home Affordable program, you can refinance your Fannie or Freddie Mac home mortgage, and through HOPE for Homeowners, you can refinance with a mortgage that has federal insurance. To qualify, the home must be your primary residence and you must have the means to pay if you get the new loan, even though you are currently struggling.

4. Talk to an FHA-approved lender. If your current lender has approval from the Federal Housing Administration (FHA), you can talk to your lender about your qualifications for federal help. If not, you'll have to contact an FHA-approved lender about your options.

5. Sign all necessary paperwork. Once the lender agrees to help you, whether with or without government help, you'll need to sign the paperwork to make it official. Read through this thoroughly to look out for hidden costs.

Tips & Warnings

• You do not have to pay for counseling regarding foreclosure avoidance. A company that charges you for this service is a scam.

References

• Federal Trade Commission: Mortgage Payments Sending You Reeling? Here's What to Do

Resources

• HUD: HOPE for Homeowners
• Making Home Affordable