Can I Refinance?
There are refinance loans that are available for people who currently
are in foreclosure. Credit scores are not taken into consideration.
There are two main determining factors which are: equity and value.
EQUITY
Usually need at least 30 - 35% equity available with a few exceptions
as low as 20% For example: if your home is worth $200,000, you must not
owe more than $140,000 (30% equity). The way to figure out how much
equity you have is by dividing the amount you owe on your mortgage by
what your house is worth. You then take that figure and multiply it by
100. This will give you the amount that is called your LTV (Loan to
value) Subtract your LTV from 100 and that will give you the percentage
of equity that you have.
VALUE
For a lender to take a chance on you they usually require a loan amount
of at least $100,000. It simply isn't worth for them to take a risk on
smaller loan amounts. What this means to you is that your home should
be worth at least $140,000.
If you do qualify and have an opportunity to refinance your interest
rate will be higher than a conventional loan. Being in foreclosure you
are considered a much higher risk so a lender will require a higher
return when lending you money. Even with a high interest rate it may be
well worth refinancing if it allows you to save your home, re-establish
your credit history and/or pay off additional debts. For some
refinancing at a higher rate may make matters worse.
