©Tax Credits - flickr

©Tax Credits – flickr

If you are facing foreclosure you may be looking into ways to stop it or save your home.  One option that should be explored and works for many people is a refinance loan.  A refinance loan is where you get another mortgage loan to pay off your existing loan on your property.  This will help you stay out of foreclosure as long as you can keep up with the new loan payments.

Getting a refinance loan used to be quite easily, but now with the market flooded with foreclosures and homeowners looking for help the lenders are a bit more strict and do follow some guidelines before approving you for another loan.  Keep in mind that basic requirements to qualify for a foreclosure refinance can vary from lender to lender.

3 Things That Lenders Will Look At Before Giving You A Refinance Loan:

1. Credit History- This will be looked at closely, so hopefully your credit hasn’t been damaged to much.  If you are in the early stages of foreclosure and have only missed a couple mortgage payments your credit should not be affected too much.

If you have been missing payments on different credit cards and utility bills for several months then that may be a concern, it just depends on how much it affected your credit score.  It is still worth a try, because you never know when they just might approve you, even when you thought there was no chance.

2. Income- Of course your income will be looked at before receiving any kind of loan.  You have to show that you can afford the loan, plus any other necessary expenses you might have like utilities.  You are not going to receive any kind of loan if you have no income to pay it back.

3. Loan To Value- The last thing that will be looked at is the loan to value, which shows the amount of a first mortgage lien as a percentage of the total appraised value of real property.  Lenders like to know that they are not taking to big of a risk when they give you a loan.

A refinance loan can be harder to obtain the further along your are in the foreclosure process, because likely your payment record and credit history has already been negatively affected, especially if your more than two months behind in payments.  This is why a refinance loan is a good option to think about in the pre-foreclosure stages, before you have missed a payment.

Also if you are having huge financial problems and don’t have any income coming in, then a refinance loan may not work because it necessary to usually put 30% equity into the home.

Even though mortgage loan companies do have some basic requirements for one to achieve a stop foreclosure loan, some lenders can be more understanding of the circumstances of the borrower.  Getting help and finding someone to fight in your corner and talk to the banks for you will increase your chances of getting a loan approved.  Exceptions can always be made, so make sure you research all your loan modification options and talk to the right people to help you through the process.

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