Recent years have not been easy: negative macroeconomic growth has caused massive unemployment, as high as 12-15% in some states. Many homeowners ended up with negative equity in their homes, owing more than their houses are worth. While individuals with savings set aside and prime credit scores were able to navigate though this financial storm, people living paycheck to paycheck faced a true nightmare.
The Best Strategy is to Sit Tight and Wait
The best advice, when you are upside down on your mortgage, is to continue living in your current residence for the next few years. This is an easy task for households with steady, recession-proof jobs. For layoff victims in depressed areas it is not going to work at all. Limited employment prospects force them either to relocate or to settle for a smaller wage, which simply may not be sufficient to service debts and life expenses, and may lead to foreclosure and bankruptcy. Losing a house is one of the most stressful things in life. Nobody has to go through it, since there are refinancing options available, even for homeowners with bad credit.
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Government Has Some Alternatives
Massive unemployment, foreclosures, and bankruptcies are as bad to a country as they are to its citizens. Not only those encourage negative growth and deepen the recession, but also spread panic and raise questions regarding the ability of the government to take care of its taxpayers. Therefore, a program called Making Home Affordable was implemented in 2009. It is government-sponsored and allows individuals to modify or refinance their existing mortgages regardless of their credit history. The basic benefit to homeowners is getting lower monthly payments, thus minimizing defaults and foreclosures, as well as preventing real estate market from further declines. While there are several criteria to be met to become eligible, none of them relate to credit scores, so it is perfect for people with bad credit.
Getting Approved For Mortgage Refinance Is Easy
With ability to refinance up to 125% of current home value and with opportunity to modify your mortgage to make it affordable based on your current income, this program is designed to assist homeowners with their needs. Pre-approval takes literally one minute: there are only few questions to answer. Once qualified, there is some paperwork to do with your current mortgage servicer. While most of it is legal technicalities, handled by your mortgage company, you are typically required to provide a couple of recent bank statements, pay slips, and tax returns. While refinance under Making Home Affordable program may not benefit individuals with excellent credit, since they may already have low interest rates, it is definitely of great help for people with mediocre and bad credit scores.
What If I Do Not Qualify For Mortgage Refinance and Modification
Making Home Affordable is not only about refinance: it is a complex homeowner assistance program with many features. While the main postulates are clear and concise, technicalities are rather complex. There are many other solutions offered, that are frequently adjusted to keep up with rapidly changing economy, such as financial incentives for people with good track of mortgage payments, foreclosure alternatives, second lien modifications, and so forth. The best option one may have is to discuss his or her individual situation with a qualified professional to see how they may benefit from this program.
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