Posted: 31 May '18

How a Bad Credit Mortgage Lender Can Help You AVOID Bankruptcy

If you own a home and are facing bankruptcy, it's time to consult with a bad credit mortgage lender about the debt relief options that are available to you. Below are three solutions that a bad credit mortgage lender may suggest in order to help you avoid insolvency.

Mortgage Refinancing

One solution that a bad credit mortgage lender may suggest is a mortgage refinance. Not to be confused with a second mortgage, mortgage refinancing replaces your current mortgage with a new home loan carrying a lower interest rate. Refinancing can save you hundreds, or even thousands, of dollars over the term of your mortgage. This will provide more room in your monthly budget for paying down your existing consumer debt.

Home Equity Loan (HEL)

Home equity loans allow you to borrow a lump sum of money based on the amount of equity you have built up in their home. The cash you receive can be used in any way you desire -- including consolidating your debt. Home equity loans typically carry lower interest rates and longer terms than personal loans, making this type of lending ideal for borrowers who are house-rich but cash-poor. Additionally, the interest rate is fixed, making it easier to manage your monthly budget and meet your other financial obligations. A bad credit mortgage lender can help you assess your current financial situation and advise you as to how much financing you can get approved for. Your bad credit mortgage lender will also run calculations to determine how much debt you can comfortably afford to take on.

Home Equity Line of Credit (HELOC)

The third solution that a bad credit mortgage lender may suggest is a home equity line of credit (HELOC). A HELOC is similar to a home equity loan in that your equity is used to secure the financing. There are two important distinctions between the two types of loans, however. Firstly, a HELOC is a type of revolving credit account. This means that you'll be able to access cash as you need it and pay down your debt as your budget allows. The second important distinction between the two types of loans is that HELOCs typically carry a variable interest rate. This means that your minimum monthly payments will be automatically adjusted to reflect market conditions. Your bad credit mortgage lender can help you determine which type of lending is better suited to your financial situation and budgeting goals.

If you're carrying significant debt but have equity in your property, declaring bankruptcy should be your last resort. Contact a bad credit mortgage lender today to discuss creative solutions to your financial situation.