Need A Foreclosure Loan? Can You Qualify?

Facing the loss of your home is difficult but fortunately there are ways to stop the foreclosure.
There are many circumstances that can bring about foreclosure such as unexpected unemployment, the degradation of jobs, loss of income due to medical emergency or death in the family. When facing situations such as these, it is best to consider your options and act immediately. A foreclosure loan is typically an option most homeowners think of as a means to stop home foreclosure. And, while most homeowners feel that a foreclosure loan is the quick easy answer it is, unfortunately, not available for most borrowers in foreclosure.

When in foreclosure, 90 days or more behind, a new lender requires at least 60% equity. Very few homeowners have that much equity especially with the current devaluation of real estate. While it typically doesn't hurt to check out the possibility of a foreclosure loan, it is critical that other options be pursued at the same time. If the lender is still accepting payments make sure that you continue making them despite what the loan broker may tell you.

It is common for loan brokers to give you a false sense of security by telling you to quit paying your current mortgage payments because it is easier for accounting when your new loan funds. This is a very dangerous approach. Most foreclosure loans to not get approved and if you have followed the loan broker's instructions you are now months behind on your mortgage, the mortgage payments have most likely been spent and you are now truly about to lose your home.

Make sure that letters from the lender are not ignored as these letters may include critical information such as your foreclosure sale date and reinstatement amount. Don't talk to your lender until you have educated yourself as to what the lender needs to see in your financial picture. Talking to the lender at the wrong time or without the proper knowledge can make things worse. However, once you have the proper information speaking with the lender is the only way to save your home.

So, while checking out the availability of a foreclosure loan is ok, it is critical that you pursue other alternatives to stopping foreclosure. Remember, most loan applications from homeowners in foreclosure are not approved.