Foreclosure Refinance
A lost job, even in a two income household, can leave cash strapped homeowners with few choices. Many homes are needlessly lost because the homeowners didn’t know they could refinance their mortgage.
Refinancing can trim down monthly payments by reducing the interest rate, spreading the balance due over more years or both. There are numerous lenders that will refinance a mortgage even if the home is in foreclosure or the homeowners have a low credit score.
There are three types of foreclosure refinance loans. All of them rely on some combination of equity, credit score and income to qualify a borrower for a foreclosure refinance .
Traditional Refinance:
To qualify for this type of loan the borrower must:
1. Be less than 90 days late on the existing mortgage.
2. Have a credit score better than 650.
3. Have at least 10% equity.
4. Job and income need to be verified.
Hard Money Refinance:
This type is basically the same as a sub prime, high risk or bad credit mortgage. Credit scores are not given great weight. They can be hard to find and charge a higher interest rate. To qualify for this type the borrower must:
1. Have 30% equity.
2. Have sufficient income to afford the payment.
Hope for Homeowners:
A program sponsored by the federal government that refinances the current mortgage into a 30 year, FHA insured mortgage. The new mortgage will be no more than 90% of the current appraised value of the home. The original lender will have to agree to write down the current mortgage to that amount.
To qualify a borrower must:
1. Live in the home as the primary and only residence.
2. Have made at least six payments on a mortgage originating before January 1, 2008.
3. Have an inability to pay current mortgage without assistance.
4. Have monthly mortgage payments that are more than 31% of the income.
5. Not have been found guilty of fraud in the past ten years, purposely failed to pay debts; and did not deliberately provide fictitious information to obtain present mortgage(s).
As you can see there is hope even if you are having trouble with these trying economic times, if you’re interested in learning more check out the bank foreclosed homes guide for more details.
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