What most homeowners facing the loss of their homes don’t realize is that they can refinance to stop foreclosure. Stopping the foreclosure process is often as easy as paying off the lender — and paying off the lender is easier than many homeowners may think.
Home Refinancing To Avoid Foreclosure
The easiest way to stop a foreclosure is often to find someone else who is willing to write a mortgage on the home, then take that money and go to the original lender. The original lender harbours no animosity towards the homeowner. They simply want to recoup the money they lent out initially, and circumstances have led them to believe that foreclosure is their best hope of doing that.
As it happens the Canadian foreclosure process is extremely time consuming and expensive. It may be six months or more before the foreclosure is complete, and in that time there are many court costs and legal fees for the lender to shoulder. If they can avoid a foreclosure — whether by negotiating with the homeowner or taking a cash payment for the balance of the mortgage — they usually will.
Even if the foreclosure has already gone to court, the court usually imposes a six-month “Redemption Period” during which the homeowner can “redeem” the mortgage and stop the foreclosure. How does one “redeem” the mortgage? By coming up with the money needed to pay off the mortgage balance.
The problem many homeowners face is that their foreclosure is only part of their problems. Often a foreclosure happens after losing a job, suffering a serious injury, or another misfortune. To make matters worse, the sudden loss of income often sends their credit south — with the result that traditional lenders are no longer willing to write them a new mortgage, and refinancing appears to be difficult or impossible.
How To Refinance Mortgage Bad Credit
Fortunately it is definitely possible to refinance even for homeowners who have bad credit. The solution lies with alternative or private lenders. These lenders are willing to refinance your home and take over the mortgage — stopping the foreclosure — even if your credit score is sub-par.
Of course you must still be able to fulfil some criteria. In general, you must have at least 10% equity in your home and a steady source of income. But, provided you can meet those criteria, then you are in an excellent position to stop your foreclosure by refinancing your home.
The company that can help is HOS Financial. We have a Refinance Buy Back program which is designed for homeowners like you. How it works is the following.
After connecting you with a lender who refinances your mortgage, even if you have bad credit, your foreclosure stops. You continue living in your home — you do not have to move. At the same time, you enter our credit mentoring program.
Our credit mentoring program will help restore your credit to excellent health in the space of a few short years. The idea is that you will be able to transition out of the “alternative” mortgage and back to a traditional one quickly.
Plus, once your credit is back up to a healthy level, you will not have to worry about facing foreclosure again. (For most homeowners, foreclosure was only an issue because they could not borrow enough money from traditional lenders to cover the gap.)
While you continue living in your home, a portion of your monthly rent will be automatically set aside as a down payment on the traditional mortgage when you exit the program. This way, you will be able to walk into a bank (normally in 2-3 years time) and get a mortgage on your home, while having great credit and the down payment in hand.
If this sounds like an option that’s right for you, contact HOS Financial today. Our network of private lenders is willing to take you on even if you have bad or no credit… the primary criteria are that you have a steady source of income and at least 10% equity in your home.
When you call, one of our specialists will walk you through the application process to get you into the Refinance Buy Back program as quickly as possible. If you are facing foreclosure, then time is of the essence! The longer you wait, the more costly and difficult things can get.
Additionally, if the foreclosure has already moved into the court system, the clock is ticking. Once the “Redemption Period” is over, then the court will order the sale of your home and it may not be possible to stop the foreclosure by refinancing. Therefore, you must act now — call HOS today.
Understanding Second Mortgages And Foreclosure
Depending on how you use them, second mortgages can be a blessing in foreclosure — or a curse. A second mortgage can help stop the foreclosure process if you use it to bring your primary mortgage current. At the same time, a 2nd mortgage foreclosure can mean that you face a deficiency judgement that holds you liable for the balance of the mortgage even after the home has been sold at auction. Fortunately, if you are facing foreclosure, the second mortgage lender is often very willing to negotiate.
Stopping Foreclosure With a Second Mortgage
If your current mortgage lender has indicated that they are planning to foreclose but have not actually begun the foreclosure process, you may be able to get a second mortgage that will halt the foreclosure.
The way this works is the 2nd mortgage brings your current mortgage up to date. You can use this for a case where you are behind on your payments but the primary lender is still willing to keep you as a client — provided you can take care of the back payments which you’ve missed. Here, the 2nd mortgage is essentially acting as a “stop gap” to cover payments you missed as a result of a financial emergency or other extenuating circumstances.
Where 2nd Mortgages Can Cause Problems In Foreclosure
If your home does go into foreclosure and you have both first and second mortgages, the second mortgage lender is in an uncomfortable position: while it’s true they have a lien against your home and they can stake a claim on the property if you fail to repay the loan, they cannot establish any rights to the property until the first mortgage has been fully paid.
As a result second mortgage lenders would much rather find another option for them to get the money they are owed. For homeowners who are in trouble or starting to fall behind on payments, calling their lender to discuss the available options is often a very good idea. You might be surprised just how willing they are to modify the terms of your loan to accommodate your financial difficulties. Remember the first offer they make will be designed to give the lender maximum benefit — you can go back and negotiate better terms that will more comfortably suit your current situation.
In some cases you can also negotiate a “settlement” amount which completely finishes off the debt. Still, remember any kind of modification or settlement of a second mortgage will appear on your credit report.
Unfortunately for you as a homeowner, if you do not satisfy the second mortgage holder and they are not happy with the amount they receive from a foreclosure sale — in many cases they will not receive any money when the home is sold — they still have other options. Depending on the jurisdiction they may be able to obtain a deficiency judgement against you, which would require you to pay off the balance which is owed after the proceeds from the foreclosure sale have been entirely used up.
How To Stop Foreclosure Even If You Already Have A Second Mortgage
If you already have a second mortgage, or if your current lender is not willing to let you bring your first mortgage current, you can still keep your home and stop foreclosure.
The way you do this is by refinancing your first (and, if necessary, second) mortgage. To be sure, you should do this using a traditional lender if possible. But, if you are facing foreclosure, most traditional lenders will not be interested. Therefore, you’ll be looking at an alternative source of financing, such as the HOS Financial Refinance Buy Back program.
The HOS Financial Refinance Buy Back program connects you with private lenders willing to pay your current mortgage lender off right now. They are willing to take on your mortgage no matter what your credit score is right now, and this can also be used for second mortgages. It even works if you are already in the legal foreclosure process — provided the case is in the court-ordered “redemption period,” HOS Financial will cover the court-ordered payment needed to stop the case.
Once your home is safe, you can keep living in it. A portion of your monthly rent is set aside for a future down payment towards a traditional mortgage. At the same time, you go through expert credit counselling to bring you back to “good credit health.”
Therefore, once you exit the HOS Financial Refinance Buy Back program, you will be the kind of borrower which banks love to see. You will be able to get a new traditional mortgage on your house, buy a car, or do any of the other things which require good credit.
To find out more about the HOS Financial Refinance Buy Back program, simply pick up the phone to call one of our refinance specialists now.