REFINANCE FORECLOSURE FAQ

Frequently asked questions about refinancing a home facing foreclosure.


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FORECLOSURE REFINANCE FAQ

Below are frequently asked questions about refinancing foreclosures.

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Frequently Asked Questions

Can I refinance my home if I am currently in foreclosure?

Will I have to pay a higher interest rate on a foreclosure refinance?

Are closing costs high with foreclosure refinance?

Can I get an FHA loan after 1 year of paying my foreclosure refinance?

Can I refinance my home after the bank completed their foreclosure?

How long will I have to wait after foreclosure before I can buy a home again?

Can I refinance a foreclosure, if my x-spouse caused the foreclosure


Can I refinance my home if I am currently in foreclosure?
Possibly yes. Private real estate investors will occasionally refinance homeowners in foreclosure, if the right set of circumstances exist.

Will I have to pay a higher interest rate on a foreclosure refinance?
Most likely yes. Interest rates on private financing are generally much higher than FHA, VA and conforming rate mortgages. Often however, monthly payments can be kept down to a minimum, by putting much of the interest to the principal of the mortgage.

Are closing costs high with foreclosure refinance?
Yes, closing costs can range anywhere from 4 to 6 points. There is some comparative savings; as private investors, usually do not charge underwriting and lender fees. There is rarely and escrow requirement. Thus overall, closing costs may seem somewhat comparative to a more conforming mortgage.

Can I get an FHA loan after 1 year of paying my foreclosure refinance?
Possibly yes. If you were several months behind and have made all payments never 30 days late, and can prove that with funding either 1) coming out of your checking account and/or 2) money orders, a underwriter might allow you to refinance your private mortgage into an FHA mortgage. You would probably need to re-establish the right consumer credit as well for the next 12 months.

Can I refinance my home after the bank completed their foreclosure?
Usually not. Even the most aggressive private lenders tend to shy away from this type of transaction.

How long will I have to wait after foreclosure before I can buy a home again.
Generally 3 years for FHA or USDA; or 2 years for VA. However, on August 15th, 2013, FHA released Mortgagee Letter 2013-26. The subject line of this mortgagee letter is: “Back to Work - Extenuating Circumstances”. Per the FHA, the purpose of that Mortgagee Letter is to: “provide minimum underwriting standards and criteria for evaluating borrowers who have experienced an Economic Event, that resulted in a severe reduction in income due to a job loss or other circumstances resulting in reduced Household Income”. This includes bankruptcy and foreclosure waiting periods. If you are able to document a severe loss of household income that is recession related, you may qualify for an FHA loan, purchase or refinance, 12 months after re-establishing credit, post foreclosure and/or post bankruptcy discharge.

Can I refinance a foreclosure, if my x-spouse caused the foreclosure.
If you were living in the home at the time the foreclosure commenced, you will likely not qualify. However, if you can document not living at the subject property at the time when the default or foreclosure began; and if you can show savings sufficient to catch up on the portion of the arrears (back payments) to help cure the foreclosure, you may be able to refinance the home solely in your and/or in combination of your and your new significant other's name. However, LTV (loan to value), in these cases are usually limited to 85%.




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