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Avoid Foreclosure with a Credit Comeback Loan

By Sheryl Landrum
Mortgage Credit Problems Columnist


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Having poor credit scores equates to higher interest rates on your home loan, as well as riskier loan products that can create a greater potential for a mortgage foreclosure. If your credit scores are low, and you are worried about a potential home foreclosure, you may want to consider a credit comeback loan: the alternative to sub-prime loan products and possibly home mortgage foreclosures as well.

Credit comeback loans can help you avoid foreclosure and reward you at the same time. Credit comeback loans allow for borrowers with credit scores as low as 500. A credit comeback loan will begin approximately 1.5% higher than loans for borrowers who have good credit. While the interest rate is higher, there are benefits to credit comeback loans that can prevent a home foreclosure. This mortgage loan product is stable, usually a 30 or 40 year fixed rate loan, and the interest rate will decrease by .375% each year if you make your house payments on time. This interest rate may be reduced each year for up to four years, a l.5% reduction from the initial start rate. After the four year period ends, you will maintain the lower interest payment for the duration of your loan. This means that if your mortgage begins at 7.5%, it could drop to 6% over four years instead of increasing like so many bad credit and pre-foreclosure loans do!

Home foreclosures can be devastating to homeowners and can affect their credit for years to come. If you are concerned about a risky home mortgage and worried about a potential mortgage foreclosure, talk to your loan officer about a credit comeback loan. He or she should be able to guide you through the process of getting a stable mortgage product while avoiding a home foreclosure. A win/win situation for those who have poor credit.

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