Mortgages for People in Foreclosure

If you have been unable to keep up with home mortgage payments, you face the real possibility of foreclosure. Take the first step by meeting with your lender to discuss options to keep your home. You may be eligible to obtain a loan modification. Each lender has different variations, but there are many common elements of mortgages for people in foreclosure. You may be able to switch your mortgage from an adjustable rate to a fixed rate. During the real estate boom in the last several years, adjustable rate mortgages, or ARMs, were a popular choice for people buying a first home or trading up to a pricier residence. Lured by the initially low rates, many people opted for ARMS, only to have interest rates adjust to considerably higher levels within a short period of time. If you face this circumstance, you may be able to convert to a fixed-rate mortgage that is impervious to the volatility of an ARM.

Some lenders may be willing to offer a lower rate of interest on fixed-rate mortgages for people in foreclosure, resulting in a monthly payment. You may also be able to negotiate an increase on the amount of years you have to pay your mortgage. This may be especially helpful if the entire mortgage comes due soon, and you are unable to pay a lump sum. Your current mortgage package may be equipped with stiff late fees and other penalties. A mortgage modification may reduce those fees or eliminate them entirely.

To qualify for a mortgage modification, you will probably be required to document your need. Your lender will likely ask you to submit a written request for the modification. You will need to estimate your current liabilities, including your mortgage payment, car payment, credit card debt and other bills. Verification of your current income is another common requirement among lenders. With help from your lender, you may be able to gain a fresh start on home ownership.