Avoid Foreclosure By Refinancing

By Gabriel Traverso
Mortgage Credit Problems Columnist

Across the country, many homeowners have fallen behind on mortgage payments, and the news is full of rising foreclosure rates and the suffering bad credit mortgage market. However, this doesn't mean you can't refinance your home loan to save your home.

Payments Going Up? Refinance Before It's Too Late

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Over the past few years, it became quite common for homeowners to buy perhaps a bit more home than they could afford using alternative loans like the adjustable-rate mortgage (ARM), interest-only loans, or hybrid mortgages. Other consumers got into the habit of refinancing every year in order to finance a comfortable lifestyle. For many of these homeowners payments are starting to go up and some are worried about the possibility of foreclosure. Don't think that your lender considers foreclosure the only option — you can still refinance your home loan and get out of trouble.

Bad Credit or Not, Most Lenders Want to Help

Even with bad credit, it costs too much to foreclose on your home and your mortgage lender doesn't want to resort to that. Most lenders are happy to help as long as you communicate what your needs are. If you need to refinance, then call and explore that option.

The Washington Post recently printed a story about Ernestine Witherspoon, a resident of Washington, who became late on her mortgage. She got behind on her payments by almost $10,000 and was worried her lender, Countrywide, would foreclose on her home. Her story had a happy ending, though. "We would much rather work with a borrower than go through the foreclosure process," said Steve Bailey, Countrywide's senior managing director of loan administration.

The Washington Post

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