Foreclosure Loans Help Those Behind On Mortgage Payments
Filed under Loans
Homeowners who have fallen behind on their mortgage payments have several options to save their homes from foreclosure. The majority of foreclosures could be avoided if the homeowners had taken the proper steps to save their homes when they first became delinquent on their mortgage payments. These are the loans for people in foreclosure.
Foreclosure Refinance Loans
One option to save your home from foreclosure is to get a foreclosure loan. A foreclosure loan is a refinance loan that is obtained to prevent foreclosure, usually after the legal foreclosure process has begun. A foreclosure loan is difficult to get unless the homeowner has at least 30% of equity in their home. There are two other factors lenders look at when granting a foreclosure loan, your income and credit score.
Some foreclosure lenders are more lenient with their guidelines, and you may quality for a foreclosure loan regardless of your credit score. Usually in a foreclosure loan, borrowers will pay higher interest rates and loan fees.
Foreclosure Loans Process
Getting a foreclosure loan is not an easy procedure.
- First, you should get an appraisal and do a lien and title search to find out how much equity is in your home.
- Next, you need to find a lender who finances foreclosure loans. Lenders are more willing than ever to negotiate with borrowers to avoid foreclosure, because it is not in their best interest to foreclose on your home.
- Write a letter of hardship with an explanation of the reason you are delinquent on your mortgage payments.
- Get documented proof of your income and of the equity in your house, which will provide collateral to obtain a foreclosure loan.
Loans To Help Stop Foreclosures
There are three types of loans to help stop foreclosure of your home.
- A traditional refinance loan is the hardest foreclosure loan to qualify for approval. You will need at least 10% equity in your home and a credit score above 650 points. To borrow money for this sort of loan, you will need documentation to prove your income.
- In a hard money loan, your credit score is not the deciding factor in determining if you qualify for a loan. You need at least 35% equity in your home, and you must prove collateral by showing you can afford the monthly payments.
- Another option for a foreclosure loan is to borrow money from a private money lender. This type of foreclosure loan is a hard money loan that is funded by a private individual. Generally, a minimum equity of 20% is required. The interest rates on a private money loan can be as low as 7%. Use caution when dealing with a private lender because making money is their primary objective, and if you fail to make a monthly payment, you could lose your home.