In desperation one may decide to roll the debt into a home equity loan. This may seem to be the only alternative to stop the interest charges from compounding. In some cases this may be the only recourse. But for some if they have little ability to pay the mortgage in a timely manner because of other financial burdens they may risk losing the house by defaulting. In this case the problems may just be starting.
Many who have defaulted on mortgage payments and enter foreclosure will then start looking for help in the form of a broker who advertises as a foreclosure specialist. many a story has been told where these so-called saviors in white suites will work things out so that no foreclosure takes place once the client pays a legal processing fee or obtains another loan. Problem is once this additional loan defaults the home is taken away.
If ones job is in jeopardy or ones savings are depleted it may be time to think in terms of a credit counseling program by an accredit credit help organization. Credit counseling programs can accomplish much. For instance a cc service can help you restructure your debt. Often making bigger concessions from creditors that you would not have been able to get otherwise. That includes lower interest rates and canceling of penalties and overdue interest. In many cases, creditors will list overdue debt as current debt.
Does this mean that refinancing ones home to pay debt is not a good option? Many have saved hundreds of thousands of dollars refinancing to a lower rate, while lower monthly payments and even getting cash back for other important expenses. But the bottom line is what the individual can truly afford.
To determine the best option available consider the following questions.
Can you afford the up front costs of a refinance loan?
Can you really afford to make the mortgage payments?
Are there any hidden fees that may be charged?
One online financial resource, http://www.mortgageloansearch.cc advices users "to take their time examining the options when contemplating refinancing in order to reduce debt and read the small print, asking questions up front regarding how these loan programs work. If your not comfortable with it don't sign the dotted line."
If refinancing your home seems to be the best option consider the no cost loan. No cost loans free the borrower from having to pay large up front costs in order to obtain a loan. All fees are attached to the monthly payments of the loan itself and spread throughout the life of the loan thus reducing the burden of having to take money out of ones savings--money that may be needed for an emergency mortgage payment.
If one is completely without options Bankruptcy may be the next mode of action. Remember, its what you truly can afford that determines the action to be taken when seeking to reduce or eliminate debt. Talk with a trusted financial professional to see which option is best for you.
Add your voice to the conversation.