refinance home foreclosure


Can I Refinance My Home to Avoid a Foreclosure?

When the pandemic struck full force in 2020, millions of Americans lost their jobs and suddenly became unable to pay their mortgage. Fortunately, the government stepped in and the CARES Act provided mortgage forbearance to any homeowner with a federally-backed mortgage.

Originally, the forbearance protection was set to expire at the end of last year in December. This changed when the program was extended until March 31, 2021 and again when it was extended to June 30, 2021. 

If you are one of the many Americans who requested forbearance, you may be wondering what will happen when your forbearance ends. In short, you will need to start making payments again. But what happens if you can’t avoid the payments? Can you refinance your home to avoid a foreclosure? Here’s what you need to know.


Mortgage Forbearance & Refinancing

If you cannot make the payments on your mortgage after your forbearance period ends, your first step should be to talk to your lender. Many lenders are happy to set up repayment plans. Another option that may help you with being able to catch up on payments is refinancing.

Before COVID, homeowners had to wait twelve months to refinance their home after a forbearance. Now, however, many are able to do it in as soon as three months. If you have a Fannie Mae or Freddie Mac conventional mortgage, you can apply for a refinance after you make three consecutive payments.


Refinancing & Foreclosures

One important thing to mention about refinancing to avoid a foreclosure is that in most cases, the borrower must be current on their payments. Most lenders hold this as a requirement. However, some may be willing to make exceptions.

What you don’t want to do is fail to act on the matter and continue to miss payments. If you do this, you will probably get a notice of delinquency, which will negatively impact your credit score. 


Am I Eligible to Refinance My Home?

Another important matter to consider in this situation is eligibility requirements for a home refinance loan. Here are some of the factors that lenders look at to determine eligibility:

  • How long you’ve owned the home
  • Your credit scores
  • Your current home equity
  • Your DTI (debt to income) ratio
  • Proof of income
  • Homeowners insurance verification
  • Additional requirements determined by your lender


Do You Have Questions About Refinancing?

If you have questions about home refinancing or are concerned you may be headed for a foreclosure, please do not hesitate to reach out. We’d be happy to go over your concerns and help you explore your financial options. Call today to get in touch.