It is a common knowledge that the best way to avoid foreclosure is to begin from scratch after you’re done something to refinance your home. The only dilemma for most people is that refinancing a home is not that simple.

Avoiding foreclosure is very problematic.  Your problems will be aggravated by the fact that there are all kinds of mortgage brokers and lenders out there who will only waste your time with empty promises. Don’t waste your time with these especially if you’re facing the prospect of foreclosure anytime. Only 4-8 months are left after you miss your first mortgage payment. However, this amount of time depends on state and the lender you used.

While you’re sorting out your problems, make sure you avoid the following pitfalls.

Brokers who just want to bring in business. It’s true that mortgage brokers and lenders have preyed on desperate people in trouble.  They won’t offer you a solution to get refinanced, but they will try and convince you to believe that they can help you prevent foreclosure.  Some will simply take your application and use you as a lead for any other promotion they might have. Although you may be able to think about their offers for the long term, it’s easy to get your hopes up and before you know it, two months have passed and you still have the same problem.

Some mortgage brokers or lenders also try to line their pockets with your trust by taking a fee up front. They know you will believe them when they say they can help, but the fact that you have to pay for their consultation makes it shady.

So, if you don’t believe these people, how can you help yourself avoid foreclosure?

You will require equity in your home.  It depends on how far you are in the process, but you will need at least ten to twenty five percent equity in your property. The closer to foreclosure your home is, the more equity you are going to need. For instance, if you are more than 2 payments late and you do not have 25% equity at least, it is likely that you will not be able to refinance. When you calculate your equity, make sure you take into consideration all the late charges and legal fees.

How delayed you are in payments makes a huge difference when trying to refinance.  As soon as you hit the 90 days mark on your mortgage, there will be some changes. The rate will drastically vary, and your chances of refinancing will become slimmer. This is one of the main reasons why you should choose a good broker or lender. If they do not know the process of dealing with these types of loans, they may dilly dally and cost you your refinancing chances.

There are private lenders that will tell you they can lend you money for avoiding foreclosure. These are more commonly referred to as hard money lenders.  The process is not encumbered by rules and there are no underwriting guidelines. Your chances of getting a loan this way may be dependent on your capacity to pay the loan, as determined by the private entity. This is also a case by case basis and not all people who need to refinance can go for this option.  The catch is that the interest rate can be quite expensive.