If you're facing foreclosure, Consolidated Credit's HUD-certified housing counselors can provide personalized advice that can help you save your home. There are several programs to help homeowners who are at risk of foreclosure and are struggling with their monthly mortgage payments. Read on for an overview of available resources. There are two fundamentally different ways to request a reduction in the mortgage payment: a “refinance” and a “loan modification”.
A refinance basically consists of taking out a new loan at a lower loan rate to “swallow” your old loan. In most cases, to refinance, you'll need to be up to date on your mortgage, and the better your credit and income, the better your chances of being approved. In the case of a loan modification, in most cases lenders won't consider a modification unless you are behind on your mortgage payment. This is a dead end, because when a homeowner falls behind, their credit deteriorates and they risk foreclosure on the property.
If you're willing to pay higher monthly payments over a shorter period of time, you can save more on interest and fees, and you'll eliminate your debt sooner. If the debts you want to cover with debt consolidation have negatively affected your credit rating, or if your debt-to-income ratio is less than 36%, you risk getting a loan with a higher interest rate. While you may have already paid the amount of the original debt, you will continue to pay the loan, plus interest. If you're wondering if getting a debt consolidation loan can help you avoid foreclosure proceedings, the answer is “Yes”, if you can also answer these 3 questions the same.
A good debt consolidation company tells you that it just transferred your debt to a convenient loan to help you save money on interest and fees, and make it more affordable for you. Using a home equity loan for debt consolidation will generally reduce your monthly payments, as it will likely have a lower interest rate and a longer loan term. You must have an excellent credit profile if you want to consolidate your debt with an unsecured loan. If you don't want to miss a mortgage payment or monthly payment, you can apply for debt consolidation using the accumulated value of your home.
First, you transfer ownership of your home to the mortgage lender (called deed instead of foreclosure, see below) in exchange for a waiver of your mortgage loan and monthly payments. The positive aspects of consolidating with a secured loan include getting lower interest rates, reducing overall monthly payments, and saving money in the long run. Be aware of the fact that you may not be able to repay your debt consolidation loan and, in the process, lose your home. Accredited debt consolidation lenders will insure you as a second mortgage or home equity loan, placing your home as collateral.
Debt consolidation risks can be avoided if you do your research before applying for a loan, acquiring good spending habits, and making monthly payments. With a deed in lieu of foreclosure (DIL), you transfer ownership of your property to your mortgage lender in exchange for a waiver of mortgage and monthly loan payments. If a lender offers you an abbreviated solution for all your debts, without a debt management strategy or a convenient loan term that encourages repayment, you are likely to end up with more debt and homelessness. It's also an effective way to consolidate debts and quickly eliminate credit card and high-interest loan balances.
