3 Tips for First Time Home Owners in Danger of Foreclosure

Many first time home owners out there are at risk of going into foreclosure. In some cases, the burden of owning a house is just too much to handle. Combine the house payment with credit card bills, medical bills, food, gas and living expenses and the burden is too large to bear. If you are facing foreclosure, you should realize that you still have options. Although it may be a difficult time, there are a few things to remember:

1. Refinance

If you have not actually gone into default yet, there is a chance that you could refinance the mortgage. This might enable you to cut down your monthly payments enough to make a difference. If the interest rate in the market is lower than it was when you initially got your mortgage, you could save quite a bit of money every month. This could be the difference between you being able to afford your house and losing it to foreclosure. Shop around and see if you can find the best deal and get approved for a new mortgage.

2. Loan Modification

If you are already in default, it is still not too late to act. If you want to save your home, there are a few things that you can do. Once you receive a default notice in the mail, you need to call the lender as soon as possible. They may be willing to work with you and help you out. With a loan modification, you can actually renegotiate the terms of your existing mortgage. With this procedure, you are not getting a new loan. You are only altering the terms of the existing one. You might be able to get a lower interest rate, lower payment, or a number of other conditions that can help. You will not know if you can do this unless you ask the lender.

3. Hard Money

If you have been going through some hard times, but you know things will get better, you might have to take drastic action to keep the house. By using hard money loans, you can keep the house and keep foreclosure away from you. Hard money lenders are private investors that have extra cash that they want to invest.

With this cash, they expect to get a higher return than average. The terms will not be good, but it will allow you to keep your house. This is only a short term solution, so you will have to secure traditional financing after a certain period of time. Most of the time, hard money loans are set up as one or two year balloon loans. This means that you only make interest payments during the term of the loan and then have to come up with the full balance at the end of the loan. Therefore, you should only use this method as a last resort and you know you will be able to afford it.