Foreclosure Buyout Programs
Homeowners can avoid losing their homes through foreclosure buyout programs. A foreclosure buyout program, or mortgage assistance, allows homeowners to find permanent solutions to unaffordable mortgage loans. If you have a predatory loan or experience a significant reduction in income, a foreclosure buyout program can help you stabilize your finances through a reduced monthly mortgage payment.
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Term Refinance
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Refinances occur when you replace your existing mortgage loan with a loan bearing new mortgage terms. Refinances often lower a homeowner's interest rate. Depending on the amount of your previous interest rate, a refinance can save you hundreds of dollars a month in mortgage payments. You can request a refinance from your lender or through the federal Making Home Affordable program. The Making Home Affordable Refinance program is available to homeowners with Fannie Mae or Freddie Mac loans who have been current on their mortgages for the past 12 months.
Cash Out Refinance
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A conventional foreclosure buyout method is cash out refinancing. For homeowners to qualify for cash out refinancing to satisfy their outstanding mortgage debt, homeowners are generally required to have 25 percent or more equity in their homes. The surplus equity in your home allows you to set up a payment plan for your delinquent loan. However, the cash from your refinance is not considered income. Seek an alternative method of foreclosure buyout if your mortgage payments will still be unaffordable after the cash from your refinance is spent.
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Loan Modification
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Loan modifications are permanent changes to your mortgage loan to create affordable monthly payments. Some loans are modified to incorporate a longer repayment term. For example, instead of a 30-year mortgage you can extend your loan to a 40-year mortgage to reduce your payments. Loan modification can also include adding you past due balance onto the principal of your loan to bring your loan current. If you are delinquent on your loan and have a source of income, you may be eligible for a loan modification.
Short Sale
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A short sale occurs when you are allowed to sell your home for less than the balance of your mortgage. You must obtain approval from your mortgage lender in order to qualify for a short sale. If the current market value of your home is less than the amount you owe, you may be eligible for a short sale. Finding an investor to buy your home after you are approved for a short sale can be a challenge, but the effort you put in is worth escaping the foreclosure process.
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