Home Loans and Support

Can I refinance while my house is in foreclosure?

Q. Moe, I am trying to save my home of 13 years in Southern California. I would like to refinance my house in order to make my payments more affordable. It still has about 10% equity, but I am in foreclosure. Do you think I can obtain a mortgage in my current situation?

A.  Unfortunately, with only 10% equity, it would be impossible to refinance your home while it is in foreclosure. When a borrower is in default on their current loan, their only source for financing would be what is called a “hard money loan.” These type of loans are usually only available to people with a lot of equity in their properties. These type of lenders are looking for homeowners who have at least 50-60% equity or less in their property.

So, this is not an option for you at this time. Since you are in default, you need to start looking for help now before it is too late!

Before your home is foreclosed on, there a couple of things that you can try in order to save your home and buy a little more time before things get more complicated. What you need to do is start computing what you need to cover the necessary costs of your mortgage, any past dues, as well as any penalty fees resulting from being behind in your payments. Trying to find a lender will be a complete waste of time and that is what you do not have a lot of right now.

  • So your best bet is to negotiate with your existing lender to restructure the loan.

There is a popular home saving method being used by struggling homeowners right now. It is called a loan modification. This is when your current lender agrees to assist you by reducing your current interest rate on your loan down to affordable levels. They may also work with you on any late payments and fees you may owe them. A loan modification can help you to readjust your monthly payments to something that you can handle and get things caught up. Some lenders may even take your past obligations and put them at then end of your restructured loan payments so that you are kept up to date again.

Remember to discuss all possible options with your mortgage servicer and act fast while you still have time.

There are some HUD approved non-profit hsouing counseling agencies you can call for free help with your mortgage. You can try www.995HOPE.org, 888-995-HOPE or www.NACA.com. These agencies can help you with paperwork and in dealing with your loan servicer. You can also join our forum with over 30,000 other homeowners who are helping one another through the foreclosure process. Please join and share your story.

If you are having other debt issues, you should consider working with a non-profit credit counseling firm in your area. Credit consolidation will allow your credit counselors to negotiate on your behalf with your creditors and combine all your monthly debt obligations into one monthly fee. Credit consolidation services even help you get caught up with your other bills as well and is something many banks are open to. 

Remember to act fast. Refinancing a home in foreclosure is almost impossible right now. You need to attempt a loan modification before it is too late.

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About Moe Bedard

My name is Maurice Bedard, but most people call me Moe. I am the founder of America's #1 Mortgage Forum, LoanSafe.org, and also a website design firm called We Create Web Designs. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications. I currently live in Carlsbad, California with my beautiful wife and children.

2 Responses to Can I refinance while my house is in foreclosure?

  1. Jill Simandl says:

    Please Help Ocwen told me not to make my payments until they had a new house payment total. They would get back to us in 10 days. It was 3 months and they put our home in foreclosure. My mother paid the reinstatement bill. They wont modifies my loan now. We do qualify for Hemp. They wont give it to us because of missing documents. They don’t care. Would someone let us refinance with them A good company? Trust me they want to foreclose on us!
    They are ruthless

      (Quote)  (Reply)

  2. robert says:

    i did my budgute meeting with them month ago said they would call me in a week but have not. these banks need to relize that it not so peoples folt that there behind its the econmy that scewed people

      (Quote)  (Reply)

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"Hello Moe, I just wanted to tell you, your website has saved my life (literally), I stumbled on your site in the middle of losing my home, I was able to network with people going through the same thing as I am. I didn't feel alone anymore, I have tried to give back and counsel those that haven't walked in my shoes yet. We hear so much about what is wrong with America, I just wanted you to know, you are whats "right" with America."

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