|By Ashley Russell on January 31, 2011
Families find themselves in financial dilemmas more and more these days because the economy has been steadily declining. For some, they need help on their mortgages, but they have already fallen behind on their mortgages. For some of these families, bad debt remortgage may be the answer.
Bad debt remortgage is when a family, or individual, is behind on their current mortgage and in danger of losing the title to their house, or in other words, foreclosing. The family’s private lender will agree to extend refinancing to them but it is usually associated with fees and sometimes a payment plan.
The benefit of this program is that the lower monthly payments are more manageable because the overall amount of the loan is now spread out over a longer period of time. This can be especially helpful for those who are missing payments due to a recent unemployment situation. Another benefit of the remortgage is that the new rate could be lower than the original rate. This would make the monthly payments even cheaper because less interest would be paid.
For a family that is struggling with other debts, this remortgage could also really help them. If the equity, or value of the property, has gone up, then the new plan could give the owner extra money to help settle other debts they may be suffering with.
Although this program has some benefits, there are also drawbacks. As stated in the opening, this program comes with some fees. The papers must be drawn up by a lawyer, which will cost out of pocket. Also, the whole object of this plan is to lower payments, not to eliminate them, so a monthly payment is still required.
Before committing to this plan, be sure that it is the right one for your situation. For some, if they wait for a little longer then their credit score may increase which would, in turn, let allow you to negotiate a better deal.
Private lenders understand that with these harder times higher payments may be unreasonable. Therefore, use the options given in order to avoid having to foreclose on your house.