©Vichaya Kiatying-Angsulee - freedigitalphotos

©Vichaya Kiatying-Angsulee – freedigitalphotos

When facing foreclosure one of the first things most people consider doing is to look for is to restructure their mortgage.  This a great option to try and do if you meet the minimum requirements; otherwise you’ll just be wasting your time when there may be better solutions for you to avoid foreclosure.

With the ever-increasing foreclosures happening on the market, the qualifications for a mortgage restructure are getting much stricter.  All lenders and banks know that people looking to restructure their mortgage are in usually in some sort of financial crisis; likely trying to save their home and stop a possible foreclosure.  For this reason the lenders are going to be taking a close look at your situation and finances.  They will follow the rules and regulations tightly before approving any kind of 2nd mortgage.

Your first goal, just like when you bought your home, is to prove that you can afford the payments on a new mortgage.  When you are asking for a mortgage restructure, you are likely doing it, to stop foreclosure, which it will help doing, but usually your monthly payment will be higher than before.  For this reason alone you must be able to show the lender that whatever your financial problems are now, they are going to clear up and you can afford a higher monthly payment than before.  For instances if you have lost your job, you must prove that you either have another job lined up or another financial provider in the household that can make the payments.

If you have damaged credit, try to get it fixed up before applying for the new mortgage.  It really is worth putting the energy in get your credit number as high as possible this will help keep your mortgage interest rate lower.  In the long run a lower interest rate is what you want, you don’t want to be paying for your house twice.

If your credit and income is solid, go talk to your lender and see what mortgage options are available to you.  Sometimes they can take your past due amounts and just tab them onto the tail end of your mortgage; this will help bring you current.  This is one option to ask for right away, even ask them to waive the late fees.  If you have the good credit and income and can prove that you have been very consistent with your mortgage payments and just ran into some temporary money problems, the lender is going to help you, but you must ask for it.  They do want to avoid foreclosure just as much as you do.

Another option to look into is re-financing the loan; this is a good option if you aren’t in the default state yet.  If you have some home equity built up, you can use it to lower your monthly mortgage payments and save your home from foreclosure.  This is a solution for people that have lived in there home for a long time and have that equity really built up.

If you feel that you are unable to meet the general minimum requirements for a mortgage refinance loan, remember that exceptions may be made.  It doesn’t hurt to try, especially when you are facing foreclosure, you want to know that you did everything possible in your power to save your home.

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One comment

  1. […] enough equity built up in your house you might be able to borrow money from that, in order to pay past due mortgage […]