FORECLOSURE REFINANCING TIPS
Mortgage Loan Modification
Foreclosure refinancing is the lengthy process of having your loan restructured by the lender to reflect a lower monthly mortgage payment.
Although many loan modifications have been performed to date, few have lowered the actual principal amount (value of the property at time of purchase). Most mortgage loan modifications are reducing the interest rate either temporary or permanently and increasing the term of the loan.
How long does it take for foreclosure refinancing?
Nowadays most loan restructures are taking an average 8 to 12 months to be completed and, in the meantime, the lender will probably not move forward with the foreclosure. Make sure to save as much money as possible during this time-frame to prepare for the next step, whichever that may be.
Help is on the way for foreclosure refinancing!
In most states, there are loan modification companies and attorneys available to assist you if you can afford their fees. However it is important to keep up with the ever-changing programs, laws and policies recently eliminated and implemented, as they dictate how these modifications should be approached and who can handle them legally.
If your goal is to keep your home, I would generally suggest that you retain an attorney, if you can afford one, and have him or her apply for a mortgage loan modification on your behalf. In most states, attorneys are either processing the modifications themselves or out-sourcing the services to legitimate companies. Do not wait until you have a Notice of Sale to apply for a mortgage modification or you may miss the opportunity to save your home. Although many attorneys here in Nevada have reported that the lenders' attorneys are neither talking nor negotiating as they have in the past, your attorney still has a better chance of getting the results you want than you would on your own; unless you have done your homework and feel confident you have all the necessary tools to tackle this lengthy task by yourself.
What most people don't know...
Although never disclosed, most lenders only qualify you for a loan restructure application if you are in default at least 35 days, sometimes longer. If you have good credit, a loan modification would also "modify" that, unfortunately. After you reach the 35-day default mark, your lender can, at anytime, report your missed payment or payments, to the credit bureau agencies: Equifax, TransUnion and Experian. Be aware that defaulting on your mortgage payment alone does not automatically qualify you for a loan modification.
Often homeowners are confused about their qualifications for a loan restructure application as banks do not always release the reason for a non-qualification. The process most certainly makes you wonder about the lenders' willingness to assist homeowners in distress, despite all the governmental incentives they have received.
Although the cause of many headaches and much confusion, mortgage modifications remain one of the best options available to homeowners who wish to keep their home and can no longer afford their current mortgage payments.
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