There are many reasons why a family may struggle financially, especially since the onset of the COVID-19 pandemic in 2020. If you are having difficulty making mortgage payments, and you do not expect this to change in the near future, you will likely worry about your ability to keep your home. If you default on your mortgage by missing one or more payments, your lender may begin the foreclosure process. Fortunately, you have options, including seeking a new loan to refinance your home. It is best to take action as soon as possible, because once your lender initiates foreclosure proceedings, addressing these issues will become more complicated and costly.

Options for Refinancing

Refinancing differs from other types of loan modifications. When you refinance your home, you will be obtaining a loan that will pay off the balance on your current mortgage. Since this is a completely new loan, you will be required to pay closing costs and fees, and you will need to show that you have a steady income. You will most likely also need to own some equity in your home.

Since you will need to meet a variety of requirements to qualify for a new loan, it is important to begin the refinancing process before defaulting on your current mortgage. Missed payments are reported to credit bureaus, and this will lower your credit score, which will make it less likely that a lender will approve your loan.

Have you missed a few mortgage payments because of COVID-19 or for any other reason? If so, you might be inching ever closer to defaulting on your loan, which means that foreclosure could soon become a possibility. While many lenders—including most federally sponsored lending programs—put a moratorium on foreclosures during the COVID-19 health crisis, these moratoriums will soon be coming to an end. With this in mind, you will need to address any payments that you might have skipped, regardless of the reasons.

The good news is that you will almost certainly have options that can help you get your loan back in good standing so that you can keep your home. One of the most common of these options is a loan modification, and an experienced Libertyville attorney can help you with your application.

Be Proactive

Put simply, a loan modification is an amendment to the conditions and terms set in your mortgage loan agreement. The purpose of the modification is to allow you to catch up and bring your mortgage current. Loan modifications can take many forms. For example, you might qualify for a loan extension that reduces your monthly payment, an adjustment to your interest rate, or an approved capitalization of the payments you have missed. The different types of loan modifications all share at least one commonality: a modification will not be granted unless you ask for one.

For most people, a house is the largest purchase they will ever make. Buying a house is more than just a large purchase, it is often an investment, and for many, buying a house is symbolic. It is a milestone in an adult's life, and for many couples, it is symbolic of their commitment to each other.

Filing for bankruptcy will not prevent you from buying a home, but it can have an impact on certain issues related to buying the home. These include whether you qualify for certain loan types and the interest rate you can lock in. If you are considering purchasing a home in the near future, discuss this with an experienced bankruptcy lawyer before you file your bankruptcy petition. A bankruptcy can be strategic, and your lawyer is best equipped to help you when he or she understands your “big picture.”

Your Lowered Credit Score Will Impact Your Chance of Qualifying for a Mortgage

Homeowners get themselves into financial trouble for a variety of reasons. Maybe you have recently lost your job or suffered a significant injury, straining your financial resources to the point that you have begun to miss mortgage payments. Depending on the gravity of your financial situation, foreclosure might seem like it is your only option.

It is not. In many cases, struggling homeowners can keep their houses by working with an experienced foreclosure defense attorney to determine how they can remain in their homes. It can be difficult and require you to make personal sacrifices, but the payoff is the ability to remain in the home where you have lived and loved.

Debt refinancing is quite elementary and often used as a financial equalizing tool. More often than not, consumers experiencing the onset of financial difficulties may turn to mortgage refinancing to ease the burden through lower interest rates, avoid foreclosure or possible bankruptcy.

Mortgage refinancing is a viable solution to rescue your financial future. As long as your new mortgage is similar in size to that of your old mortgage and your credit is still in fairly good standing, you should be able to complete application without any long-term damage to your FICO credit score.

To explore alternative options before choosing a mortgage refinance, it may be in your best interest to consult with an experienced foreclosure or bankruptcy attorney. Before scheduling your consultation, these guidelines may provide insight as to how refinancing may or may not affect your credit score or long-range financial plans.