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Foreclosure loans are needed by some in order to avoid
losing their home. A home is usually a person's largest
financial possession and losing a home to foreclosure can
have dire impacts on one's life and one's credit score (for
the next 7 to10 years). It is extremely important to stop
foreclosures at all costs, if possible.
One way to do this is by taking out a foreclosure loan.
Sometimes called hard money or bridge loans, a foreclosure
loan is usually a short-term loan (1 - 2 years) that has
the sole purpose of paying off the missed mortgage payment
and stopping the foreclosure before the sale date of the
house.
Usually foreclosure loan lenders need to know four items
before they can process the loan:
1. State the foreclosure home is located in
2. Mortgage balance
3. Value of property
4. Foreclosure sale date
Since layoffs and threats of unemployment may cause many
to worry about foreclosure, HUD and the Department of Veterans
Affairs (VA), the Department of Labor and the mortgage industry
have come together to offer low interest foreclosure loans.
The most obvious place to check with for a foreclosure loan
though is with the original lender for your home.
Several foreclosure loan options may be available that
you hadn't even thought of before. For instance, a lender
is always willing to discuss accepting the total amount
owed to them in a lump sum by a specific date. This option
is usually combined with something called forbearance. In
forbearance, the lender may allow you to arrange for a reduction
or suspension of payments for a short period of time after
which another option must be agreed upon to bring your loan
current.
Another kind of foreclosure loan is a mortgage modification
loan. For those who can make their payments on your loan,
but do not have enough money to bring their account current
or cannot afford the total amount of the current payment,
their lender may be able to change one or more terms of
the original loan to make the payments more affordable.
Some of the modifications may include:
- Adding the missed payments to the existing loan balance
- Changing the interest rate, including making an adjustable
rate into a fixed rate
- Extending the mortgage loan term to lower the monthly
payments
For those with mortgage insurance, you may qualify for
a claim advance. A claim advance is an interest-free loan
from the mortgage guarantor to bring your account current.
The repayment of this loan may be deferrable for several
years.
Your lending institution or another institution may even
have some other options not listed here. It is important
to discuss your situation with your lender first to see
what the options are for stopping foreclosure on your home.
Acquiring a foreclosure loan may just save your home and
your financial security for years to come.
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