How To Conduct A Mortgage Refinance When Delinquent

Although homeowners who are delinquent on their mortgages may feel as though they are closer to foreclosure than they are to getting back on track with their loan payments, there are many paths out of delinquency if homeowners know how to refinance properly.

While lenders have different definitions of what is considered to be a delinquent mortgage, Lender Processing Services (LPS) considers delinquency to have set in after 30 days of late payments. According to LPS, which tracks non-current payment and foreclosure rates in the United States, monthly delinquency rates increased last month to 8.15 percent - more than 4 million homes - which represents a 2.7 increase over November 2010 numbers. However, at this time last year, the delinquency rate was nearly 10 percent higher, and it was about 30 percent higher at its peak in January 2010, so there is reason for optimism.  

If you live in New Jersey, Nevada, Florida, Illinois or Mississippi, which reported the highest rates of non-current loans, or if you are facing delinquency, you may be looking for a way out. While there are several options, you should first remain in contact with your mortgage lender to communicate why you have fallen behind in your payments.

Your mortgage lender may be willing to work with you to conduct a mortgage refinance. It may modify your loan agreement by extending your borrowing term, adjusting your interest rate or adding the amount you are delinquent to your loan balance. Some FHA loans may allow you to receive a loan from the lender equal to the amount you are delinquent. Most commonly, a lender will roll the amount you are delinquent into your regular payment over the course of several months.

Again, the best method for avoiding foreclosure is to work with your lender. It may have repayment options available that you have yet to consider.

Knowing When To Refinance From An Adjustable To A Fixed-Rate Mortgage

Mortgage Refinances, Home Purchases Affected By Payroll Tax Extension