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About Foreclosure and Refinance

Mark Cappel
UpdatedAug 19, 2007

Can you help me find a lender to refinance my house now that I am in the redemption period of my foreclosure?

Can you help me find a lender to refinance my house now that I am in the redemption period of my foreclosure?

When you say that you are in the redemption period of your foreclosure, I assume that you mean that the foreclosure has been finalized and that the mortgage lender has taken possession of the property. In most states, homeowners whose property has been foreclosed upon have a set time, frequently one year, in which they can pay the outstanding mortgage balance and all costs of foreclosure to reclaim the property. This process is called redemption.

Quick Tip

Each state legislature created unique foreclosure and anti-deficiency laws. Follow the links just mentioned to learn the foreclosure rules relevant to you.

It is unlikely you will find a lender willing to lend you the money required to redeem your property. You must keep in mind that the cost of redemption includes not only the outstanding mortgage balance, but also foreclosure costs, attorneys’ fees, and even the costs incurred by a third party buyer if the mortgage company has sold the property. Unless you had a significant amount of equity in the home, your equity may not be able to cover the costs associated with the foreclosure. Unless your equity can cover all costs plus the outstanding mortgage balance, you will probably not be able to borrow enough money to redeem the property.

If you do have the equity in your home, Bills.com makes it easy to apply for a refinance mortgage.

Even if you have enough equity to justify a loan, you must also show that you will be able to pay the new mortgage loan. Since your previous loan was foreclosed upon, any potential lender will want you to demonstrate your ability to make your loan payment before lending you the money to redeem your foreclosed mortgage. Generally speaking, you would need to show a material change in circumstances before a new loan is offered. This means that your new lender will want to see that your financial situation has improved since the foreclosure. Without a major improvement in your finances, there is no reason for the lender to think that you will be able to repay the new loan any better than the old loan. However, if your income has increased significantly, a new lender may be willing to extend a loan to help you redeem your home.

Quick Tip

Debt distressing you? The Bills.com Debt Coach is a no-cost online tool that will analyze your debts and show you the options available to resolve them and the costs and benefits of each.

If your ability to make the payments on the mortgage loan has improved, a loan to redeem the property may be a feasible option. I encourage you to visit the Bills.com Home Refinance Resources page to read more about refinance loans. If you enter your contact information in the Bills.com Savings Center at the top of the page, I can have several pre-screened lenders contact you to discuss the options available to you.

I hope this information helps you Find. Learn. Save.

Best

Bill

Bills.com