Avoid Foreclosure: Option 2- Refinancing

Option 2.REFINANCING

Definition: Paying off an existing loan with the proceeds from a new loan, usually of the same size, and using the same property as collateral.

I don’t believe that refinancing your home is always in your best interest. Sometimes, once your financial situation is examined in both the short and long term it may be the worst thing you could do at this particular time. However, sometimes, refinancing your home is the best move you can make providing you have the income to support the new payment. This option is only available to you if your current loan does not exceed the value of your house.If the loan is higher than value, regular refinancing is not an option.However some lenders have been willing to refinance for the value of the house and offer a different type of loan for the balance, following different terms for this portion of loan.Ask your mortgage lender if this option is available to you.

WARNING:

You’ve probably received letters from mortgage brokers and lenders saying you are already pre-approved for a new mortgage. The fact is that it is very difficult to arrange new financing when you’re already in default on your existing mortgage. Be very cautious about sending advanced fees of $300.00 to $600.00 to lenders or mortgage brokers. Usually it’s a ploy to take advantage of your financial situation.

If you attempt to refinance, you should always have a backup plan available to you. Many times I have had homeowners call days before the auction saying their financing did not go through, and then it’s too late!