Refinancing Can Help Avoid Mortgage Foreclosure

By Richard Barrington
NFNS Columnist

If you are having trouble paying your mortgage, don't panic. Thousands of Americans have found themselves in this predicament. Finding a way out of the situation requires that you bear down and work through the problem rationally.

Refinancing Tactics

One thing to consider if you are having trouble making mortgage payments is whether there are refinancing tactics that will help.

Obviously, the best-case scenario is if mortgage rates have fallen. Refinancing at a lower rate will reduce your monthly mortgage payment. If rates have not fallen, consider refinancing for a longer term. This lowers your payments by spreading them out over a longer period of time. This does mean paying more interest expense in the long run, but that is certainly a better alternative than losing your home altogether.

If your existing mortgage is a 30-year mortgage, you might not think refinancing for a longer term is an option, but look again. First of all, mortgage companies are getting more and more creative about loan terms. Second, suppose you've been paying your mortgage for four years. Effectively, what you have now is a 26-year mortgage. Refinancing the remaining balance over 30-years is very likely to reduce your monthly payments.

Don't be shy about working with your mortgage company on a solution. Don't think of mortgage companies as adversaries--remember, those mortgage companies are in the business of seeing their customers succeed in paying their mortgages.

Get Expert Advice

If you can't work out a refinancing solution on your own, try to get some expert help. U.S. Government agencies such as the U.S. Department of Housing and Urban Development offer tips on avoiding foreclosure. State and local governments might have helpful resources as well.

Never forget--mortgage companies and society as a whole would rather see you keep your home than lose it to foreclosure. Keep your head up and work on the problem, as opposed to trying to hide from it.


U.S. Department of Housing and Urban Development

How to Refinance

Mortgage Calculators