For homeowners who have more than 15% equity and whose mortgages are less than 90 days past due, refinancing is often an excellent way to stop foreclosure and regain financial control. Among other possible benefits, refinancing will:
? Stop foreclosure
? Roll in past-due mortgage payments and fees
? Lower mortgage interest rate
? Lower monthly mortgage payments
? Pay off higher-interest bills like credit cards
? Lower overall monthly payments by consolidating debts
? Improve credit by paying off delinquent accounts
For some homeowners hoping to stop foreclosure, mortgage refinancing may be the most attractive option.
Disadvantages of a Refinance:
1. Borrowers that do not have sufficient equity will not be able to refinance.
Many homeowners who find themselves facing foreclosure have little or no equity in their homes. With home values dropping considerably, some homeowners find them selves ?upside down?, or no equity (owing on the mortgage more than the house is worth), affecting a persons ability to refinance.
2. Interest-only payments or lower initial mortgage payments in an adjustable rate plan.
3. Generally speaking, it can be difficult for the borrower to refinance if the equity in the home is less than 15% of the value with a FICO score under 620. Lenders may require borrowers with credit problems and lower FICO scores have 25% equity.
Refinancing Example: Pete?s home is currently valued at $ 200,000. He will have difficulty arranging to refinance to stop foreclosure if there ?mortgage payout? is more $ 170,000 on the home. Pete?s refinancing will become particularly problematic if their mortgage is more than 90 days past due, and then even greater equity may be required.
K. Patrice Williams has a BA in Economics as well as a law degree. She has successfully managed both residential and commercial multi-million dollar income producing assets and budgets for more than 10 years. As a 1st year law student, Patrice established a real estate development and consulting business and acquired over 30 rental properties. As the housing market values decreased- like millions of other Americans-her properties were negatively impacted by shifting ARM?s, combined by a sluggish economy. Patrice has researched and personally implemented almost all of the pre-foreclosure techniques detailed in the book: ?6 Simple Steps to Avoid Foreclosure?. http://www.avoidforeclosuremanual.com
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