So you are a shopaholic. You see a nice pair of shoes, or a lovely dress maybe, and your hands get all itchy. And when you've had your mind set on the item, that unbelievable price tag becomes insignificant. And since you have your credit card, money is not an issue either (at least for the moment).
Bags of Problems
And that's where your entire problem is coming from. Suddenly, your ?real income? is lower than ever. Your monthly outgoings have skyrocketed that you barely have anything left for your personal expenditures, much less for debt payments. And your credit card loans are now beyond the amount that you can manage.
You know it. You're in too deep and you are in a real mess. You wake up in the morning besieged by your worries and you find it hard to catch some sleep at night with all your nagging thoughts about debt payments and all the problems that go with the package. Now what?
You have to Act on Your Problem
One thing is for sure. You have to act on your problem immediately. This is not something you can procrastinate, lest you find your debts reaching even more uncontrollable heights.
So how do you deal with it? Pay off your debts and start anew. You may think it's easier said than done, if not impossible. If you do think this way, you have not heard about mortgage refinance. This is one option you can count on at times like these.
The Solution to Your Problems
So how does a mortgage refinance solve your problems? A mortgage refinance gives you everything you need ? the money to pay your numerous smaller debts, lower interest rates, and lower monthly payments. How so? It's all simple. Through a mortgage refinance, you transfer from an unsecured loan to a secured one.
A mortgage loan is a secured loan because it holds a collateral that serves as security, as opposed to your credit card loan which is unsecured. In a mortgage loan, the lender holds the right to foreclose on the collateral, usually a valuable real estate property, in case of nonpayment. This means more security on the part of the lender and in turn, more room for generosity in terms of interest rates and monthly repayments.
Consolidate Your Debts with a Mortgage Refinance
This is mainly why a growing number of borrowers are using mortgage refinance to consolidate their debts. That is, they place their home under a second mortgage where they get money to pay off all their smaller yet numerous debts. After the deal is set, they only have one debt to take care of. This means less confusion and daunting paperwork. More so, you get the benefit of lower interest rates and its contingent reduced monthly payments.
With your mortgage refinance, you get to pay your numerous debts and you get to have more manageable monthly payments. Now you can head on to a fresh start. You must make sure that you don't put this chance into waste. Once you've got everything sorted out, do not go back to old habits, lest you lose your most valuable asset ? your home. Grab your solution and make the most out of it.
No financial planner would ever recommend a mortgage refinance (one form of debt consolidation) to get out of credit card debt. It is substituting secured debt for unsecured debt and you could lose your home over a bunch of unsecured credit card debt if you get injured or can't afford your new higher monthly payments.
Also, and these are verifiable published reports, 77% of all people who refinance their way out of credit card debt are right back at the same level of credit card debt 2.5 years later on average only now with less equity in their home. So it obviously isn't fixing the problem.
why?
Because no behavior modification was needed. You made it too easy on them to just refinance out of cc debt. No financial planner will ever recommend that route.
In settlement though they have to go without using credit cards for 2 to 3 years and do go through behavior modication as does an alcoholic in rehab. Secondly, credit counseling entries on your credit report are as bad as bankruptcy entries they will crash your FICO for 10 years and take you from a 700 FICO down to low 500's literally overnight.
Debt settlement on the other hand is only a late pay on your credit report. Late pays bring down a 700+ FICO about 40-50 points, they bring down 600+ FICO's about 30 points, and bring down 500+ FICOs about 10-20 points. But more importantly, the FICO goes back up more than the drop from late pays as we eliminate the debt so their debt to income ratio goes down to zero and their FICO is back up higher than it was before they joined a settlement program even with the late pays on there, but we demand a withdrawal of the late pay entry as part of the negotiated settlement and get that 99% of the time.
Superior Debt Relief is the only debt settlement company that pays for three levels of credit restoration afterwards to bring the FICO up even higher. Settlement is one of the methods used by mortgage consolidation people to get someone qualified into a home that was denied financing due to too high of a debt to income ratio.
Both Rony Walker & Dan Maurer are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Rony Walker has sinced written about articles on various topics from Finances, Breast Cancer and Mortgage. Solve your debt problems with a . You can consolidate your debts into a single, more manageable. Rony Walker's top article generates over 165000 views. to your Favourites.
Dan Maurer has sinced written about articles on various topics from Finances. Employed by Superior Debt Relief, a debt settlement company that has been negotiating and settling accounts since 1998. Superior Debt is able to settle accounts in more states with higher success rates and lower percentages than any other settlement comp. Dan Maurer's top article generates over 1600 views. to your Favourites.