Can anyone tell me if it is possible to refinance a loan in which you are currently delinquent on? My husband and I got severely behind on our mortgage. We have tried to re-modify the loan, twice, and were denied because our income is too high. (???) We had some unexpected expenses through the year that caused it to get behind, as well the mortgage company (Wells Fargo) increased the minimum amount required in escrow by $4500, causing our monthly mortgage to go up by over $500 a month. We honestly want to get out from under Wells Fargo and refinance with another lender, but are curious to know if that is possible with such a large balance owed currently? Does anyone know of any credible places that can help us in this situation? We can't take out an additional loan to catch up on our current loan, that would only increase our debt and we are struggling to pay what we're paying now, hence our dilemma... please help...
Hi A. - Even in the old lenient days of lending, you couldnt easily refinance a past due mortgage. Other than the lender agreeing to modify your loan, I highly doubt you can do it now. You might check into a credit counseling service to help you gain some perspective on your situation and contact a realtor ASAP who can perhaps help you sell your home before it goes into foreclosure.
I don;t know about the refinancing but you can force them to lok over your escrow again. There are legal limit--I think 2 months--that a bank can make you have as cushion in your escrow account. I forced my lender to look at it again after they told me that my account was fine. I ended up with a check for the overage and lower payments. Take a look at the taxes you paid last year as well as your homeowner's insurance. The taxes from last year plus your insurance, divided by 6 will give you the cushion required.
This is from a borrower advice website:
Federal regulations allow mortgage companies to require homeowners to pay in additional amounts as a cushion against increases in tax and insurance bills. This amount cannot exceed one-sixth of the total annual escrowed amounts, or approximately two months of extra escrow payments per year. State regulations can reduce the amount of extra payments mortgage companies require to be escrowed.
I seriously doubt you can get a loan when you are behind in your mortgage. Sometimes, I'm sure I sound like a broken record because I suggest it so much but please go to your library and borrow Dave Ramsay's "Financial Peace" or "Total Money Makeover". It is invaluable information about how to make your money work for YOU.
This plan will also allow you to budget for unexpected expenses, or take into consideration an irregular income, so this doesn't happen to you any more! Lots of re-financing and debt consolidation is NEVER the answer and only gets you deeper into debt. Best of luck!
Call your congressman and ask them , They should have some local numbers that could help. Find out if they voted for the bankers bailout , if they did then I would put the pressure on them to help you figure this out with you.
You can refinance despite delinquencies. But you may find it difficult to get good terms (i.e. interest rate) due to recent poor credit performance.
For example, when you got your mortgage at WF, your credit score might have been a strong one and so WF thought you were a good risk and gave you a lower interest rate. But due to delinquencies, your credit score has now dropped and so any bank you refinance with won't lend to you at the best rate. All this means is that you will pay more each month to cover added interest expense AND you will have to pay closing costs or had them rolled into the principal which means an increase in your monthly payment.
BTW - Closing costs can run anywhere from 5-10%.
Have you contaced the HopeNow.org. They should be able to give you some leads.
M.
