Can I Refinance my Home in Foreclosure?
Homeowners fall victim to foreclosure for many reasons. Unemployment, divorce, medical emergencies and other unforeseen circumstances create financial distress. If you are facing foreclosure, consider refinancing your home through the Neighborhood Assistance Corporation of America to reduce your mortgage payments. NACA accepts homeowners facing foreclosure and who are already in the foreclosure process.
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NACA Refinance
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National advocacy organizations like the Neighborhood Assistance Corporation of America exist to create long-term financial stability for homeowners. Working with NACA can mean a significant reduction in your interest rate. At NACA Home Save events throughout the country, some homeowners have left with interest rates as low as 2 percent. In order to qualify for a NACA refinance, you must undergo financial counseling to establish a household budget and determine the amount you can afford to pay each month towards your mortgage.
Qualifications
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To qualify through NACA, you must have a verifiable source of income. NACA requires that new applicants bring a valid ID, their most recent mortgage statement, and proof of income, such as pay stubs, to the first counseling session. If you are self-employed, bring the last six months of your bank statements to the the session to prove your income. Not all homeowners are guaranteed assistance; but, according to Nashville's Channel 5 News, 80 percent of homeowners who apply through NACA are helped. All services provided through NACA and HUD-certified foreclosure counselors are available at no cost to homeowners.
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Counseling
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Consult with a HUD-certified foreclosure counselor to determine your options for private mortgage assistance programs. If you are in the 20 percent of homeowners who cannot be helped through NACA, consider other methods of saving your home. Some states have local organizations available to help homeowners catch up on mortgage payments. For example, Georgia homeowners facing foreclosure could receive up to $3,000 in aid through the United Way in 2010. A variety of options exist, but financial assistance is not guaranteed. The sooner you act, the better your chances of saving your home.
The Last Resort
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Refinancing is generally reserved for homeowners who are current on their mortgage payments. FHA, Making Home Affordable and conventional refinance programs all reject borrowers who missed payments in the past year. Homeowners in foreclosure have generally missed two or more payments before the lender begins the process. If no other aid is available, consider a deed in lieu of foreclosure or a short sale to avoid credit woes as a result of losing your home. A deed in lieu of foreclosure occurs when you volunteer your property deed in exchange for debt forgiveness. Short sales happen when the lender approves the sale of your home for less than the balance of your mortgage loan.
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