Refinancing Mortgage After Bankruptcy
Sometimes you may get yourself caught in a financial crunch. You may take a loan in a hurry or get stuck with an uncompromising or fraudulent lender. Then you may not be able to repay your loan or you may get stuck with huge interest rates (e.g. credit card debt.) You may default on your loan and go bankrupt. At these times, it is best for you to go in for a secured loan.
In a secured loan, you offer some asset as a security to the lender. If you fail to repay the loan, the lender will sell the asset and realize the loan. Refinancing mortgage is mandatory whenever you apply for a secured loan. Using this secured loan, you can pay off all your past loans. Since this loan is secured, the interest rate of these loans is very low as the risk of the lender is highly reduced. consequently, it will be easy for you to meet the repayment schedule of this new secured loan and you can get out of your financial crunch situation.
Should you go in for refinancing?
This is a million dollar question. Most of the people get utterly confused as to whether they should refinance their loan or not. The simple yardstick to make a decision is to compare the interest rates. If there is a huge reduction in the interest rate, then you should go in for it. However, if there is not such a huge impact, then maybe it is better you do not refinance your mortgage. This is because those loans will only have an negative impact on your credit worthiness.
What are the advantages of mortgage refinancing?
The first thing that happens after you opt for such mortgage, is the fall in interest payments. Every month, your installment reduces as interest rates fall. consequently, you can easily meet your loan obligations. Since your loan now seems not ‘risky’, the lender will reduce not only the interest rate but also the mortgage term. This will help you get out of debt easily. Lowered monthly repayments will ensure you have some additional cash every month. Financial independency is the most important advantage mortgage refinancing will give you.