Once your mortgage payment is found to be 120 or more days late, typically banks will find your mortgage loan to be in a state of default. If you are in danger of having your home foreclosed on, you may consider applying for a Foreclosure Bailout Mortgage. These types of loans were created to help homeowners keep their homes and properties in cases of foreclosure, by taking out a “second mortgage” in order to pay down the current loan that is in default. Typically if you have a credit score in the 500’s and possess roughly 25 percent equity in your home, you won’t encounter much of a problem in acquiring a bailout loan.
Benefits of a Foreclosure Bailout
Foreclosure Bailout programs are designed as a type of loan refinance, in order to help you keep from losing your home or having to sell it if the foreclosure process is completed. Unlike a lease back program, you will maintain full ownership of the property, and no transfer of title or deed will take place. Also, in some cases, you may find yourself able to reconcile additional debt with the funds you receive in a foreclosure bailout. In the right circumstances, a foreclosure bailout can help to get your finances and your credit rating back on the right path.
Negatives of a Bailout Loan
One of the negative aspects of a foreclosure bailout is the cost:
- Costs are typically much higher than a typical home loan, due to higher interest rates.
- These additional costs are unfortunately a necessary evil, however, because they help the lender to cover the high-risk nature of the loan.
- Another negative is the number of dishonest foreclosure lenders. Many of these companies prey on homeowner misfortune, and can end up costing you your remaining equity, and leave you without anything to show for it, including your home.
What to Do if You Feel Your Home is in Jeopardy
You are looking for a specific type of lender in this case, called an Equity Lender. Equity Lenders operate specifically by the amount of equity you have in your home. Credit score and credit history are not typically given too much consideration.
Do your research, and make sure to verify the company you choose to handle your foreclosure bailout is reputable and well established.
Getting Help
You should contact a foreclosure attorney the moment you feel your financial stability is in danger. The longer the amount of time you procrastinate, the more detrimental to your credit your situation becomes. The advice of an experienced attorney will make it much easier to help your situation.
