A foreclosure bailout is a specific type of loan made to help people who are behind on their payments.
With a foreclosure bailout, you'll be able to keep your house in exchange for selling it for a short term period to a lender.
Before you consider getting a foreclosure bailout loan, you need to know that you must have at least 15% equity in your home.
This means that the loan to value ratio of your loan is 85%.
Just like with a regular loan, your credit score and employment history will be evaluated.
However, unlike standard loans these factors won't play a deciding factor in your approval.
Once your application is approved, your equity lender will technically purchase your home from you for a short period of time (normally no longer than 18 months).
At the end of this period of time, they will re-sell it to you at the rate that they purchased it at.
You won't need a down payment to purchase your house back but will be credited the equity that you had in the home before you got the loan.
Most lenders will create a negative amortization loan to serve as your foreclosure bailout.
This means that you'll have lower repayment terms.
Your monthly cost for your foreclosure bailout payments will be significantly less than your regular mortgage.
This will help you stay on top of your payments.
The only major downside to these loans is that the interest rates can be astronomical compared to standard mortgage loans.
You can except to pay around 12% interest on the short term lease portion of your loan with the interest on the buyback portion of your loan closer to your old mortgage rate.
Even with high interest rates, these loans are a good idea if you want to retain ownership of your home.