How to Refinance With Bad Credit to Stop Foreclosure

It is difficult for anyone to refinance to stop foreclosure. It is going to be even more difficult to refinance when you have bad credit and want to stop foreclosure. A bit of perseverance and determination can help along with the following options

Instructions
Things You'll Need:

* Financial documentation such as tax receipts, proof of employment

Step 1

Contact the lender who holds your current mortgage. Attempt to negotiate new terms for your mortgage. Ask for forbearance or a temporary stay for your payments. Some lenders will allow this if you can show that you will be able to pay later. Ask if the loan can undergo modification to create smaller, more affordable monthly payments. If you can show the lender that you have a source of income sufficient enough to meet the payments, you might be able to persuade him to accommodate you. You might have bad credit, but if you also have an income, there is still hope that you can stop foreclosure.

Step 2

Borrow enough money to make at least one mortgage payment and then make the payment. This provides your lender with proof that you are serious about paying back the money you owe. It makes you look more responsible and earnest.

Step 3

Check into a partial claim through the FHA-insurance fund if you have an FHA mortgage. A partial claim through the fund allows for a one-time payment of the mortgage payments that are in arrears. This allows you to start out on a level playing field since you are paid up to date on your mortgage and it will make it easier to refinance.

Step 4

Get a co-signer if possible for the refinanced loan. Most lenders will look favorably on this. However, it might be difficult to do since it places the co-signer at risk for the balance of the loan should you default on it.

Step 5

Contact subprime lenders who specialize in borrowers with bad credit. You might pay higher interest rates and fees, but at least the funding is available and you might be able to stop your foreclosure.


Tips & Warnings

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Stop accumulating more debt when you are attempting to finance.
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Make sure that the lender you select is legitimate. Check out his references and/or credentials.