Home > Our Voices > Spotlight On...Avoiding Foreclosure

Refinance Now or Face Foreclosure

September 7, 2007

Get a FREE Mortgage Analysis Today!

The American dream of homeownership is rapidly disappearing for many inexperienced and uninformed borrowers who took advantage of low teaser rates and overpriced homes to qualify. Over the past five years, the real estate market has experienced a tremendous increase in property values across the country. However, with the housing market in a crisis, foreclosure has become an unfortunate reality to many—shattering dreams of homeownership.

The current housing market is in a downward spiral and economist are predicting that it might get worse before we see any signs of progress. Many homeowners are scrambling to hold on their houses, however they are not utilizing all resources or simply just don’t know where to turn. Home prices are steadily declining and if current conditions persist, most people with ARMs or sub-prime loans will find it difficult or impossible to refinance.

The major factor for inflated foreclosure numbers is disproportionate numbers in some of the Western states including California, Florida and Colorado, where property values were significantly higher. The majority of those borrowers relied on intro rates and option ARMs that are now rapidly adjusting due to a recent increase in the Libor rate.

The first signs of foreclosure are late payments—usually 30 days, then 60 days. The process usually starts when borrowers are 3 to 4 months behind. Depending on geographic location, the entire process can take from 6 months up to a year before property is taken. During this period is the perfect time for borrowers to seek help by refinancing or turning property over to their lender before it’s too late.

If borrowers are trying to refinance, they should first check with larger banks, such as Wachovia or Bank of America. These financial institutions have competitive rates, but also they are safer and tend to follow Fannie Mae guidelines. The last resort should be mortgage brokers or lesser known mortgage companies, which would tend to charge higher rates and offer non-traditional mortgages.

If you currently have an ARM that will adjust within the next year or if you have a high interest rate on your mortgage, you may want to consider exploring other mortgage products. Start by getting a free mortgage analysis or contact a mortgage specialist for additional information.