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Refinance out of a Bad Home Mortgage to Prevent Foreclosure

By Sheryl Landrum
Mortgage Credit Problems Columnist


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You can't pick up a newspaper or turn on the evening news without commentary on the upsurge of recent home foreclosures. Some news reports say mortgage foreclosures have doubled in the last two years. Why did this upsurge happen and are you at risk for a home foreclosure?

Experts say the rise in foreclosures is largely due to the new and unprecedented home financing programs that were popular in the past few years.

100% home financing, adjustable rate mortgages, and Optional ARM (negative amortization loans) products became very attractive to many borrowers in the past few years. However, as interest rates began to adjust upward and home appreciation flattened, many homeowners were left with mortgages they could not afford and foreclosures started to rise. So, what should you do if you have one of these high risk mortgages?

Now may be a perfect time to refinance your home loan if you have a foreclosure prone mortgage.

Mortgage interest rates are low and it's a great time to refinance out of a risky mortgage. More stable mortgage products, such as an interest only 30 year fixed rate mortgage or a 40 year fully amortized fixed rate mortgage, are designed to keep monthly payments low while offering stability against rising interest rates. Fixed rate second mortgages vs. adjustable home equity lines can also be a foreclosure buffer and some lenders are even offering "bad credit loans" to help those whose credit has been damaged.

Don't expose yourself to home foreclosures by holding a high risk mortgage.

Call your lender or loan officer today and begin the process of insuring mortgage security for your home. If you are contemplating a home purchase, be aware of the current high rate of mortgage foreclosures and look for security in a stable mortgage product. The home you protect will be your own.

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