How to Get Out of a High-Interest Mortgage or Foreclosure
There are few financial situations that cause as much stress as falling behind on your mortgage or your property taxes. After all, your home is your source of shelter, and feeling like you are going to lose it is extremely unsettling. If you are either about to lose your home or are stuck in a high-interest loan, finding a way out can be a real lifesaver, both emotionally and financially. This article prepares you with tips about both of these financial difficulties.
Credit is the key when it comes to renegotiating your current loan situation. If you have fallen behind a month or two on your loan, or you had to sign a high-interest note to get the loan that you have, if the other aspects of your credit situation are in order, it is possible to transition out of both of those situations. Lenders are much more willing to work with people who have fallen into a one-time financial difficulty if they are proactive about it, because foreclosure is a messy, drawn-out proceeding that banks would really rather avoid. So if your other debts are paid up and current, but you are having a hard time with your mortgage, banks and especially private sources will look at your other credit situation and often help you out.
Mortgage Renewal not Renewed or Foreclosure due to property taxes owed
Taxes are another key area to have in good standing when you want to transition out of a troublesome loan. If your property taxes on the home and personal income taxes are all paid up, then you’ve shown in another way that you have the intention to take care of your personal finances. Unfortunately, some homeowners fall victim to foreclosure action from their lender if the property taxes have been neglected. This occurs many times when your mortgage is coming up for renewal. Some Lenders will work with the homeowner, but not always. Your history with the lender will come into play. If the mortgage you’ve taken out stipulates that you are responsible for your property taxes and you fail to keep current and the lender receives a Tax Arrears Notice from the municipality, you will likely need to find a new lender and your existing lender will take legal action. If the equity, credit, and income are good and meet the new strict lending criteria, you will likely have no issues finding a new financial institution… however it will come at a cost of slightly higher rates than you’re accustomed to. If your situation is a messy, you still have hope if you have adequate equity. You will need to seek out an alternative or private lender with even higher rates until you get things back on track. These arrangements are meant to be short term until affairs are in order.
The equity of your home is a valued asset, so do not take out an equity line of credit in order to pay off other debts. This will not help you when you are seeking to transition out of a negative mortgage situation. Private lenders will be looking at the home itself as the collateral on your loan, and if there is another lien ahead of them in line, in addition to the mortgage they are replacing, your chances for approval are much worse. Instead, maintaining equity means that their new loan will be the first one and will therefore have priority should the worst happen and you have to sell it in order to pay the loan.
When you are applying for this sort of refinancing loan, you should also know that your lending sources are likely to ask for more documentation than you may have had to show in order to get the first loan. You may have to show financial statements for a longer period of time as well as more thorough documentation of your sources of income. This is the case because your loan is a higher risk. If you are patient and provide all of the information that the potential lending source provides, though, your success is more likely.
After you receive a transitional loan, you should be ready to pay any broker or lender fees out of the advance you receive. Be sure to factor this in when you determine the amount of financing that you need. It would be a shame to gain approval for short-term financing from a private source, only to have the amount that you have in hand fall short of what you need to escape the loan that’s been troubling you.
When you take out a private loan, you’re not getting another 30-year mortgage, as private lenders simply do not want to wait that long to get their money back. You need to know that your loan will only be available for a few years at most. This means that you need to have a plan in place to satisfy this new loan fairly quickly. If this means continuing to repair your credit so that you can apply for another traditional 15- or 30-year note later on, then so be it. The benefits of transitioning out of your high-interest or endangered loan now can make it worthwhile anyway.
Amansad Financial stands ready to help you avoid foreclosure and escape the costs associated with a high-interest loan. Because interest rates are quite favorable in today’s market, now is the time to act, and Amansad has numerous private lending sources that can help you get the financing you deserve, to give yourself the breathing room that you need.
Last Updated on