Mortgage Refinancing and Foreclosure

One of the main reasons people seek mortgage refinancing is to avoid foreclosure. Foreclosure is the process by which a mortgage holder takes possession of a home and evicts the residents.

Homeowners seek refinancing because it can help them lower their mortgage costs and their mortgage payments. This can enable some people to stay in their homes and avoid foreclosure.

Individuals who are having trouble making their mortgage payments should look into refinance as soon as possible in order to avoid foreclosure. There are a number of refinancing options that can help people avoid foreclosure.

Government Refinancing

The federal government is trying to help people avoid foreclosure with a program called Making Home Affordable. This program makes money available that will be used to help people get out of mortgages they can no longer afford.

Details of this program can be found at the Federal Housing Administration at www.fha.gov or at www.makinghomeaffordable.gov State housing agencies may also have some details of this program available for the public.

The two big federal mortgage lenders Fannie Mae and Freddie Mac also have programs to help people refinance. Details of these programs are available on their websites and elsewhere.

How Refinancing Prevents Foreclosure

Refinancing can help an individual prevent foreclosure by lowering their interest rates and their mortgage payments. Getting refinancing can enable some people to stay in their homes because it can lower mortgage costs.

One way this can work is to replace a high interest sub prime mortgage with a low interest traditional mortgage. Many people got sub prime mortgages years ago when they are cheaper and are now having trouble paying them off.

Refinancing can also replace an adjustable rate mortgage in which a lender can increase the interest rate with a fixed rate mortgage. In a fixed rate mortgage the interest rate stays the same for the duration of the mortgage. This enables a person to always pay the same mortgage payment. In an ARM the mortgage payments can be raised.

Avoiding Foreclosure

Anyone who is having trouble making their mortgage payments should look into refinancing as soon as possible. The sooner you get refinanced the sooner you can start making smaller mortgage payments and give yourself a better chance of avoiding foreclosure.

One good place to look for refinancing is your existing mortgage lender. If you can’t make your mortgage payment you should call your mortgage lender and see if you can work out a deal. If you have a good credit history, equity in your home or a good record of making payments the lender maybe willing to work with you.

The lender might even be willing to refinance your mortgage to lower your payments so you can stay in your home. Lenders might be willing to do this because refinancing is always cheaper than foreclosure for them.