Refinance
Replace your existing loan with a new one — better rate, longer term, or both — to get a payment you can carry.
Best for
- ✓You have equity (typically 10%+) and stable income
- ✓Your hardship is more about payment size than catastrophic income loss
- ✓You haven't had a 90-day late yet — late marks tank refi eligibility quickly
Watch-outs
- !Most lenders won't refi while a foreclosure is referred — you need to act early
- !Rate-and-term refi resets your amortization clock; cash-out refi adds principal
- !Closing costs (2–4% of loan) can be rolled in but increase the payoff
Arizona-specific note
If you're already 60+ days late, mainstream refinance lenders will pass. Specialty 'non-QM' lenders exist but their rates often defeat the purpose. The window to refi out of trouble is narrow — usually before the 90-day mark.
Refinance only solves a foreclosure problem when the hardship is structural payment size — not income destruction. If your income covers a payment $400 lower, refinance is on the table; if it doesn't cover any payment, refinance won't save you.
Two flavors
- Rate-and-term refi: same balance, new rate/term. No cash out. Lowest rates and easiest underwrite.
- Cash-out refi: tap equity to pay off arrears, other debts, or both. Higher rate, more equity required, more scrutiny.
For a homeowner already behind, the math has to actually work. Rolling in $15K of arrears plus $10K in closing costs can push you above 80% LTV and into PMI territory — sometimes the new payment isn't actually lower.