Stop Foreclosure By Refinancing Your Loan: Is It A Good Option?
SaveMeFromForeclosure.com, LLC announced that homeowners may be able to stop foreclosure by refinancing their loan but may encounter many costs along the way. Refinancing a home loan can help homeowners facing foreclosure avoid a pending foreclosure, stay in their home and possibly create a better financial situation. However, if a homeowner considers refinancing his or her loan to avoid foreclosure there are a few things to keep in mind. Refinancing can be a long and expensive process especially if the homeowner is already one or two payments behind on his or her mortgage.
Blaine, WA (PRWEB) April 25, 2007 -- Today SaveMeFromForeclosure.com, LLC announced that homeowners may be able to stop foreclosure by refinancing their loan but could face a costly solution. Refinancing a home loan can help homeowners facing foreclosure avoid a pending foreclosure, stay in their home and possibly create a better financial situation.
However, if a homeowner considers refinancing his or her loan to avoid foreclosure there are a few things to keep in mind. Refinancing can be a long and expensive process especially if the homeowner is already one or two payments behind on his or her mortgage.
Some things to consider are costs involved with a refinance. First, when a homeowner applies to refinance his or her loan there must be an appraisal done on the home. If the home appraisal does not fall within the LTV (loan to value) guidelines that the lender has set then they will not underwrite the homeowner's loan. So the homeowner must be aware that he or she may pay for an appraisal ($350-500) and not be able to use it. Often times if the homeowner is rejected by one lender and tries to refinance with another lender, they most likely will want their own appraisal done. Appraisal fees can begin to add up very quickly.
Another cost that homeowners should consider when refinancing is that many times in a foreclosure refinance, the homeowner will be required to pay points. One point is equal to one percent of the loan amount. So if the homeowner borrows $250,000, and the broker is charging 2 points; that is an extra $5,000 in broker fees.
Finally, there are possible closing costs: settlement fees lender fees, underwriting fees, transfer taxes, recordation charges, title insurance and credit report, just to name a few.
It is also important to understand that after a refinance, the loan balance is going to increase, because the homeowner is borrowing enough to pay off the loan, and all of the late fees, and attorneys' fee that come along with a foreclosure, in addition to the aforementioned possible costs. Add to the fact that more than likely the homeowner's credit score is much worse now (due to late payments) than when his or her loan originated. Therefore, in the new refinanced loan the homeowner is going to be paying an increased interest rate on a larger loan amount.
"There are some instances where homeowners refinance into a new, bigger payment, and they can handle it. Most of those instances are usually based on short-term job loss, or perhaps a medical emergency that had to be paid for. Unfortunately, we meet with many clients who want to refinance, but are not realistic about the new payment that they will be saddled with. This is always an important consideration when refinancing," said Justin Lee, CEO of SaveMeFromForeclosure.com, LLC and owner of http://www.savemefromforeclosure.com/.
The most important last step a homeowner should take in considering refinancing to stop foreclosure, is to make sure he or she carefully reads all the paperwork before the closing! Don't get to the closing table and find out there is a pre-payment penalty and additional closing costs that weren't anticipated.
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