Foreclosure Loans

When someone faces losing his home through foreclosure, it is easy to think "if I can just get a loan". The thinking is that a new loan will somehow be easier to pay than the existing home loan. Perhaps it will be, but maybe it won't.

The important thing is to carefully consider the terms of a new loan.

If you can extend the payment period, you may be able to lower your monthly payments. For example, the monthly mortgage payments for a 30 year loan are less than the monthly payments for a 15 year loan.

If you have an older loan, your interest rate may be higher and you may be able to get a lower interest rate. However, if you are facing foreclosure, your financial position is probably not good and you may not qualify for a lower interest rate.

With mortgage loans, there are always closing costs (lender fees, legal fees, prepaids, etc.). If you are facing foreclosure, you probably do not have available cash to pay these costs at closing and will have to include them in the new loan. The amount added to the loan to pay the costs will increase your monthly mortgage payment.

Don't forget other considerations. Some loans have prepayment penalties. Some loans have balloon payments due in the future.

The bottom line when looking at foreclosure loans is to make absolutely sure that you are putting yourself in a better position and not a worse situation. Don't let some mortgage broker convince you that a new loan is better for you than your existing loan. Be sure yourself. It is not uncommon for people to get new loans to avoid or stop foreclosure only to find out in the future that they are in a worse position than they were before the new loan.

This article is general information. If you have any questions of any nature about stopping or avoiding foreclosure, talk with a lawyer licensed in your state.

Stop! Don't blindly chase any option to stop foreclosure. See stop foreclosure options to learn what options you have in your situation. Remember, what works in one person's situation, may or may not work in your situation to stop, avoid, and prevent foreclosure. For more general information, see Stop Foreclosure - Five Options You Need To Know.

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