Buying a home is one of the biggest purchases most people will make in their lifetime. Typically, home buyers will need to secure financing and take out a mortgage to afford their dream home – this means you will need to make monthly payments to a lender until you pay off the mortgage.
Unfortunately, life is unpredictable and if a crisis arises and you cannot pay your mortgage, you may be at risk of losing your home through foreclosure. If your home is at risk of foreclosure, you need to act now.
There are several options for people facing home foreclosures like loans to stop foreclosure, refinancing, and government help. Facing a foreclosure can be a stressful ordeal and you may not know which option is best for you. Do not go through this process alone. The experienced attorneys at Moshes Law, P.C. are ready to help you. Call today for a free consultation.
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Can I Get a Loan to Stop Foreclosure?
Yes. It is possible to get a loan to stop foreclosure, however, there are many factors and risks to consider when applying for this type of loan. If you are at risk of foreclosure, it is because you have severely fallen behind on your monthly mortgage payments. This type of default will negatively impact your credit making it more difficult to secure financing.
There are several types of loans available that are geared to those experiencing financial hardship and bad credit, however, you must proceed with caution because these loans typically have a much higher interest rate, and this industry tends to breed scammers who prey on people facing foreclosure.
Mortgage Loans to Stop Foreclosure
If you have more than three months of delinquent payments on your mortgage, a foreclosure may become likely. Once your mortgage lender marks you delinquent, they will either begin a foreclosure proceeding or sell your loan to a collection agency.
A mortgage loan can help you stop this process, manage the debt, and reclaim your home. There are several options for mortgage loans to stop foreclosure:
- Refinance loans
- Hard money loans
- Reverse mortgage
- Loan modifications
- Mortgage forbearance
Each of these options has advantages and disadvantages. If you are unsure which foreclosure loan is right for you and your financial situation, you are encouraged to reach out to a lawyer who has experience with foreclosure loans.
Refinance Loans
Refinancing is when you take out a new loan to repay the existing loan. The new loan will cover delinquent payments and new terms could possibly make monthly payments feasible.
It is common for refinanced loans to extend the length of the repayment period which can lower monthly payments, however when considering interest rates, this will increase your overall loan and you will end up paying more in the long run.
The biggest hurdle that a homeowner will face when attempting to obtain a refinance loan to stop foreclosure is bad credit. Lending companies are much less likely to lend to an individual who is facing foreclosure and has delinquent payments. If you do obtain financing, it is often at very high-interest rates.
If you are facing foreclosure, there is hope and relief is not impossible. Several lending companies specialize in loans specifically for those with bad credit facing foreclosure.
Hard Money Loans
A hard money loan is different from a conventional mortgage because it is based on property value. Lenders that offer hard money loans to stop foreclosure have lower standards than conventional lenders like lower required credit scores.
Hard money loans are often approved quickly but they come with the following typical stipulations:
- You need to have at least 40% equity in your home
- Loan cannot be more than 60% of the value of the property
- You will face higher interest rates and less favorable loan terms
- The property is not used for primary residence purposes.
Hard money loans are considered a short-term solution to your financial problem. They typically provide borrowers with enough money to stop foreclosure and additional time to rebuild credit. Once a homeowner’s credit score has increased, they can apply for a traditional mortgage.
Reverse Mortgages
Depending on the amount of equity you have in your home, a reverse mortgage may be an option to save your home from foreclosure. A reverse mortgage is when you pre-sell the equity in your home to cover the defaulted mortgage loan.
A reverse mortgage provider will pay a lump sum, monthly payments, or provide a line of credit in exchange for ownership of the equity in your home. During this time, the home still belongs to you, and you can continue to live there.
Reverse mortgages are typically only available for elderly homeowners above a certain age because when the homeowner passes away, the reverse mortgage company will take possession of the property.
The downside of a reverse mortgage loan to stop foreclosure is that it may disqualify borrowers from public benefits like Medicaid. Before applying for a reverse mortgage loan, it is imperative that you know the risks. Consider consulting with a knowledgeable attorney for guidance.
How To Get a Loan to Stop Foreclosure
Obtaining a loan to stop foreclosure may be difficult, but it is possible. The key to securing financing is knowing which loan providers work with individuals with bad credit facing foreclosure proceedings.
Loan Providers
- Lending Tree
Lending Tree is a marketing lead generator and duly licensed mortgage broker. This company specializes in peer-to-peer lending and helps borrowers find and match up with potential lenders.
Using your basic information like financial and property details, Lending Tree matches you with offers for different types of loans like refinancing loans and reverse mortgages.
- FHA Rate Guide
While FHA is not a lender, it provides valuable information to borrowers about lenders who do provide FHA loans. Using this guide, you can identify sources for FHS-guaranteed finance loans, reverse mortgages, and other available loan options offered through government agencies.
- Wells Fargo Home Mortgage
Wells Fargo is a large, well-known lender and has loan options to fit any homeowner’s needs. Wells Fargo has options for refinancing loans and loan modifications. With the right loan modification, you may be able to lower your interest rate or extend your loan term to lower your monthly payments.
- Bank of America Mortgage
Bank of America is another big-name lender that could provide helpful options for individuals facing foreclosure. Some of Bank of America’s home refinance loans are even guaranteed by the FHA and Veterans Administration. You can apply for temporary mortgage forbearance to avoid foreclosure if you have a mortgage through Bank of America.
- CitiMortgage
Like other lenders, CitiMortgage offers a variety of loan options from refinancing and modification to mortgage forbearance. CitiMortgage also has options for short sales and deed-in-lieu of foreclosure that can help you avoid losing your home.
Government Programs
If you cannot obtain approval for a loan through a private lender, there may be a government loan to stop foreclosure that can help you. If you are facing foreclosure, consider looking into one of these programs:
- HUD Foreclosure Avoidance Counseling
- Homeowner’s Hope Hotline
- NeighborWorks
- Court-approved credit counseling agencies
- National Council of State Housing Agencies
These government agencies and non-profits can be valuable resources when bad credit and delinquent payments prevent you from obtaining a conventional loan.
Beware Of Scams
Unfortunately, people in desperate circumstances like those facing foreclosure, are always more vulnerable to fraud. It is important to understand that the foreclosure bailout loan industry does have scammers who may try to take advantage of your dire situation.
If you encounter any of the following situations when attempting to secure an emergency loan to stop foreclosure, you could be dealing with a scammer:
- A lender offers you a HAMP modification – this program was ended in 2016
- A lender asks for advance payment for a loan
- A third party offers to modify your loan – only your lender can modify your loan
- Any lender applies pressure tactics to coerce you into taking a loan
Before taking out any hardship loans to stop foreclosure, it is strongly recommended that you consult with an attorney who has experience in this industry. The knowledgeable lawyers at the Law Office of Yuriy Moshes are ready to guide you through the foreclosure loan process.
What’s A Foreclosure Bailout Loan?
A foreclosure bailout loan is a high-interest rate loan offered to homeowners who are facing foreclosure. A bailout loan lender would essentially pay off the existing mortgage including the delinquent payments, and the homeowner would then be responsible for the new loan.
While a bailout loan will temporarily solve your foreclosure problems, it could lead to more issues down the road. Bailout loans have a much higher interest rate which could increase your monthly mortgage payment. If you fall behind on these payments, you could face another foreclosure proceeding.
Bailout loans also have extremely high origination fees and harsh prepayment penalties. These loans are often viewed negatively and seen as predatory on people in tough financial situations.
Alternative Options
Refinancing, reverse mortgages, and bailout loans are just a couple of options to avoid foreclosure. Before making a decision, ensure that you have researched all your possibilities. Below are a few alternative options if you are facing foreclosure.
Short Sale
Instead of securing financing to save the house from foreclosure, some homeowners would rather sell their home in a short sale to get out from under the mortgage and save their credit score.
Short sales require the approval of the lender, and the lender usually only approves the request if the purchase price equals or exceeds what they would expect to gain from a foreclosure sale.
Bankruptcy
Bankruptcy is another option for individuals faced with foreclosure. Bankruptcy delays the foreclosure process which could buy the homeowner some much-needed time.
Deed In Lieu
A deed in lieu of foreclosure is a negotiation with the lender where the homeowner turns over the deed of the property to avoid foreclosure. To qualify for a deed in lieu of foreclosure, you must be unable to sell your home before foreclosure. Similar to a short sale, in this situation, you will lose your house, but you will save your credit score.
Loan Modification
A loan modification is essentially a way to refinance your mortgage to extend the term or lower the interest rate. Some lenders will work with you and settle for monthly payments that fit your budget. Typically, loan modification is temporary, and the lender will expect the normal loan terms to begin once you have resolved your financial situation.
Where To Get Legitimate Help with Foreclosure
If you are facing foreclosure, you may be stressed, anxious, and confused about the next step to take. It is important to know that there are several options available to you from refinancing your mortgage to selling your house to get out from under the defaulted loan.
It is always recommended that you get help from a lawyer who is familiar with home foreclosures and foreclosure loans. This industry breeds scammers who prey upon people in desperate financial situations.
Do not face your home foreclosure alone. Contact Moshes Law P.C. today to schedule a free consultation. An experienced lawyer at Moshes Law will evaluate your case and help guide you through the foreclosure loan process so you make the best and most informed decision about your home.
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