Unfortunately, you will run into all kinds of mortgage brokers and lenders out there who will tell you what you want to hear and waste your time. Time is something you can’t afford to waste when you are trying to avoid foreclosure. In some states you may have as little as 60 days, if a Power of Sale clause is in the mortgage agreement, until you lose your home.
Mortgage brokers and lenders have always preyed on people in trouble. There is no way they can get you refinanced but they tell you they can help stop foreclosure. Why would they do that? They don’t get paid if you don’t close so why would they take your application and keep you from looking at other options? Mortgage brokers are trained to just bring in the business…..get as many applications as they can. Some companies even have sales meetings to enforce getting applications even if they don’t close. This would surprise you but mortgage companies live by the rule “throw everything against the wall and see what sticks”. You are in a very scary situation and you are treated like everyone else. You were never going to “stick” in the first place but now a month or two has gone by and you are even farther behind on the mortgage payments.
Some mortgage brokers or lenders make money off of you by taking a fee up front. They know for a fact no one can refinance your mortgage but they tell you, for a fee up front, they will start working on your loan. Quite a nice business model don’t you think? They tell you everything you want to hear when you are trying to avoid foreclosure. They collect a fee because you believe them and they move on to the next unsuspecting person. Not another minute will be spent on you after they get your money.
So, based on this business practice, never ever pay a broker an up front fee. Regardless of what they tell you. Fact is that once you reach foreclosure, technically 90 day behind, you will be required to have much more equity in your home than most people do, your credit rating will be bad from the delinquency which will cause your new loan interest rates to be high, which in turn will make your new payments higher than your old ones, which you could not afford in the first place. Do you see a pattern here?
Who CAN successfully refinance to avoid foreclosure?
You need equity in your home. Depending on how far you are in the process, you need at least 30% equity in your property. The farther you are in the foreclosure process, the more equity you will need. If you are more than 2 payments behind and you don’t have at least 30% equity, it is almost impossible to refinance. Make sure when you are calculating the equity you factor in all the late fees and legal fees in addition to your payment arrearages..
Speaking of how far along you are in the foreclosure process, that makes a huge difference when refinancing. Once you are more than 90 days late on your mortgage, everything changes. The rate will dramatically change if you can even refinance at all after that point. That is why it is so important to pick the right mortgage broker or lender because if they are not experienced in these types of loans, they can take too long and you will pass the point of no return.
Some private party lenders may be able to refinance you to avoid foreclosure. These are typically known as hard money lenders. They decide if they will lend you the money personally. There are no underwriting guidelines. It is a case by case basis. These can be very expensive. The rate and fees will probably be so high you won’t be able to afford it.
In addition, these hard money lenders will often charge you to fly out and review your property. This fee is paid up front without any guarantee of refinance. Spend this money on solving your current loan problem, not on a hard money lenders flight.
Even if you can refinance, what is your new payment going to be? If you are having trouble making the payment now, the payment is guaranteed to be more because you are trying to avoid foreclosure by refinancing. Any loan you get will be expensive.
If you do not have equity in your property do not even consider refinancing your home to avoid foreclosure. And, realize that even if you have equity, you most likely will not be able to afford the new higher payment. Your best solution is to face your situation early and try to work something out with your current lender. Most lenders have multiple options that you can be successful with if you know when and how to approach them.
Article Directory : http://www.articlecube.com
