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Can I Refinance While My House is In Foreclosure?

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By : John Cutts    99 or more times read
In order to avoid a foreclosure, many homeowners in distress these days seek to refinance their mortgage in order to make their monthly payments more affordable. Homeowners usually only get behind on their mortgage and risk foreclosure when their monthly mortgage payments are too high for them to keep up with. Refinancing your mortgage can lower your monthly payments.

If your house is already in foreclosure, the first thing you should do is talk to your lender about refinancing your mortgage as an alternative to a foreclosure sale. With so many foreclosures coming on to the market these days, many lenders have developed programs to work with homeowners in distress and help them modify or refinance their loans. There has also been significant legislation requiring lenders to notify homeowners early on when they could be risking a foreclosure by missing payments, and a great deal of encouragement from government for banks and lenders to work with homeowners to fix their situation instead of simply foreclosing on them and selling their home.

The key to making this work is to consult your lender about refinancing as soon as possible. Sometimes, if we get a little behind we think we can catch up, and then the debt compounds and it becomes even harder to pay off. The first rule of preventing a foreclosure is to talk to your lender as soon as you think you might be in trouble. This will work greatly to your advantage, as the lender will be much more willing to accommodate and work with you if they see that you're taking responsibility early on to fix the problem.

Refinancing a house during foreclosure is a great way to halt foreclosure proceedings, protect your credit and stay in your home. Many homeowners even choose to refinance with other banks, using the new mortgage loan to pay off their previous loan and avoid a foreclosure, while also securing a more manageable rate. Just remember to be proactive and seek out refinancing options early on for the best chance of success.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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