The average American has many questions when facing the possibility of foreclosure. While you may be willing to walk away from your home, the credit hit, stress and financial loss is substantial. You cannot watch or read the news without hearing about foreclosure rates, and you yourself or those you care about may be concerned about the possibility of losing a home. Your options may vary when you fall behind on mortgage payments, depending upon your financial situation, your credit rating and other factors. Refinancing can be one way to save your home and your credit.
Who should consider refinancing in the face of the current lending crisis and when is it a viable choice? If you have made your payments on time in the past, but are concerned about your adjustable rate mortgage (ARM) adjusting up to an higher payment, a refinance can prevent this. You may want to explore your options if you are concerned about your ability to make your payments, even if they are still current. Programs are available to help with refinancing in this situation, even if your credit is not ideal.
This option can also be a reasonable plan if you can afford your home, but find your payments overly high. A lower interest rate or longer payment term can reduce your monthly payments. Do take the time to do the math and determine how much more you will pay if you choose a longer loan term. A lower interest rate may result in overall savings; however, loan costs can eat up some amount of this savings.
Qualifications for FHA loans have changed in the face of the mortgage crisis, and you may be approved for an FHA refinance. These typically offer favorable loan terms and may allow you to save your equity and memories in your home.
Early on in the foreclosure process, your lender may be able to offer assistance in a variety of ways that do not include a new home loan. If you are just falling behind on payments, simple strategies to catch you up may be all you need. A bridge loan at a low interest rate may allow you to catch up or perhaps a short forbearance, adding missed payments to the end of the loan can correct your late payment problems. These options are only effective if you are fundamentally able to afford your home payments, but are managing a short term financial crisis.
If you are concerned about foreclosure and would like to explore your options to save your home, start with your bank. Banks are willing to work with borrowers and try to bring their home loans current with favorable terms. You might also explore the counseling and assistance services offered by hopenow.com.