Refinance while in foreclosure?
Tags: foreclosure, loan modification, six months
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on Saturday, November 21st, 2009 at 12:17 am and is filed under Home Equity Loan Refinancing.
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Your boyfriend’s best option is to stick to the loan modification, no matter how much of a pain it is and how difficult it will be in dealing with his lender. Refinancing is pretty much out of the question, even with your existing lender, because of the 6 missed payments. It doesn’t matter if your boyfriend has equity in the property, the lender will still consider him for a modification if he has a legitimate financial hardship i.e. loss of job, reduced income, illness, unexpected medical expenses, etc. I understand that lenders are difficult to deal with but it’s better than the alternative…..foreclosure! Your lender may even offer a TEMPORARY solution, a forbearance plan, but insist on the loan modification. If they will only offer the forbearance, make sure the repayment period is spread out as long as possible and/or that the payments are LESS than what he’s paying now and not MORE, i.e their catch up plan, where they add the past due amount owed into his existing monthly payments making his obligation more on a monthly basis. Or see if they’ll add the past due amount into the balance of his loan, bringing him current, and continuing to make the same payment (or less, if possible by re-amortizing the loan out over a longer period). Another option is to consider renting out a room, depending on how big the property is. Good Luck!
has he discussed this with the lender?
If he has equity he probably won’t qualify for a loan mod, but it would be worth calling to try to refinance especially if he can get a lower interest rate or they could roll the late payments into the loan.
If I were him I would look into a HELOC because the fees are much smaller and closing time is faster. Something doesn’t sound right. If he wasn’t in foreclosure, would he be able to make the payments from month to month. If the answer is no, then he may as well try to sell it and salvage what he can of the equity. If the answer is yes, then he, you, his family need to focus on getting that $6,000 together ASAP.
If all he is behind is $6,000, and he can otherwise afford the payments, he really needs to look at whether or not adding more debt will make this house affordable. $6,000 is a relatively small amount of money to raise to save his house. Can’t all of his friends and family all get together and each pitch in $200 – $500 each so that at least he can buy some time to figure out what to do? Or he could sell his car, or work a second job. Even cash advances on a credit card (although I usually say avoid these as much as possible) would be better than losing his house over $6,000.
He needs to seriously look over his possible solutions other than foreclosure.