Can a Short Refinance Keep the Foreclosure Notices Away?

Mortgage foreclosure does not happen overnight.  To a pessimist, this means that it is an agonizing process where the mortgage lender swats at you for months while taunting you with promises that it will leave you alone if only you can find a way to pay an increasingly exorbitant amount of money by an increasingly short deadline, like a cat waiting to see if a cornered mouse will die of fear before it delivers the death stroke.  To an optimist, this means that there is always time to find a way to save your house, even if it is obvious to everyone that you do not have nearly as much money as the lender is requesting.  Most of the possible solutions mean that, over time, you will end up owing at least as much money as you owe now, but at least you can buy yourself time.  A short refinance, in the rare event that you can find one, actually makes your house less expensive.  To brainstorm about non-obvious solutions to falling behind on your mortgage payments, contact a Philadelphia mortgage foreclosure lawyer.

Short Refinances Are the Closest Thing You Can Get to a Mortgage Freebie

When you refinance a mortgage, the new lender pays the remaining balance on your old mortgage to your old lender and then you must repay the new lender.  It is an attractive option because the principal amount is lower than when you first borrowed, and many borrowers refinance when interest rates are low, enabling them to lower their monthly payments and save on interest over time.  In a perfect world, we would all be able to refinance our mortgages before missing a payment when our mortgage payments started to become unaffordable.

Short refinances tend to happen when you are already underwater on your mortgage, meaning that you owe more than the value of the house, whether or not you have missed any payments.  The refinance amount is less than what you owe, which means that your original lender loses money, too.  When lenders agree to a short refinance, it is because you would default on your old mortgage if they did not, and lenders lose money when borrowers default.  If that happened, the lender would have to go through the costly and time-consuming process of foreclosure and reselling the house.

From a borrower’s perspective, a short refinance is the closest thing you can get to a freebie in the world of home mortgage loans.  Nothing in life is completely free, though.  The IRS will consider the discounted amount as taxable income, so you will have to pay a portion of it at tax time.

Contact CONSUMERLAWPA.com About Home Mortgage Trouble

A Philadelphia consumer law attorney can help you find a way to keep your house if you have fallen behind on your mortgage payments, including but not limited to short refinances.  Contact CONSUMERLAWPA.com to set up a free, confidential consultation.

Source:

finance.yahoo.com/personal-finance/short-refinance-171610742.html