When facing foreclosure, you may feel you are out of options to save your home. While foreclosure is certainly one of the most difficult challenges struggling families may ever face, it is not insurmountable.
What are Foreclosure Loans
Some banks do offer something called a foreclosure loan, which essentially means the bank buys your past-due mortgage from another bank. And yes, these loans are legitimate, and even in this market, still available.
Foreclosure loans, or foreclosure “bailout loans,” may be available, depending on your eligibility and on your state’s specific guidelines for such lenders. You may even qualify for such loans regardless of your bad credit and past-due mortgage.
To find out of foreclosure loans are available to you, and if they are legitimate:
- Contact your local banks and other mortgage lenders. Asking around can provide you with a wealth of information on the specific rules in your state, what lenders may be offering, and what criteria you must meet to qualify for such a loan.
- Contact your attorney, if you have one. He or she may be able to tell you more about these loans, their legality, and what the specific “catches” are, including exorbitant interest rates, etc.
- Call your current lender. This may seem like a death wish, given that you are already behind on your payments, but you might be surprised about what you might learn from them about foreclosure loans available to you.
Once you find a bank willing to offer you a foreclosure loan, you will need to furnish them with three pieces of information:
- Your credit and mortgage history – this may look bad, but you may still qualify
- Your income – certain higher income levels and proof of steady employment may help you qualify
- Your home’s loan to value – that is the equity in your home, that is not mortgaged
However, if you do find a foreclosure lender, be sure to educate yourself and read the fine print. While these loans may be real and legitimate, they may come at a steep price. Make sure the loans are structured in a way that you can repay! Also make sure that the interest rate is one that you understand. For example, the mortgage may have a fixed rate for the first few years, and then change to an adjustable rate, which may greatly affect your ability to pay in those subsequent years. So if you do find a bank willing to offer you a foreclosure loan, don’t be caught unaware, or you may find yourself in this foreclosure position again!
Getting Help
Before taking a foreclosure loan, meet with an experienced foreclosure attorney to discuss your options. Your attorney can give you advice on whether the terms of the loan are fair and can give you options to help protect or save your home from foreclosure.
