You may have seen in the news that the stock market has taken a plunge due to a report showing that the number of homeowners falling behind on their payments has skyrocketed. The homeowners this report is referring to are those with “Sub-Prime” loans, mortgage loans made to homeowners with poor credit that could not qualify for traditional financing. Last year mortgage lenders approved loans at a record pace in an attempt to remain competitive. These loans included applications that might not have been approved if the lenders had properly verified the borrower’s income and assets. Many of these homeowners are now finding it difficult to keep up with their mortgage payments and are losing their homes to foreclosure.
The underlying problems also affects the average homeowner, not just those with bad credit mortgage loans. Many homeowners that purchased their homes with risky interest-only and option Adjustable Rate Mortgages are no longer able to afford their payments now that the lender has started adjusting the interest rate. If you are a homeowner in this situation it’s not too late to save your home. Depending on your financial situation you may be able to refinance your mortgage and avoid foreclosure.
If you are a homeowner with good credit, refinancing your mortgage will be much easier for you in the current marketplace. Refinancing your loan with a conventional mortgage loan will stabilize your payments and allow you to plan your budget properly. If you are a homeowner with poor credit you can still refinance your loan; however, it will be more difficult to find the right kind of lender to protect yourself. You might need to contact a mortgage broker that specializes in refinancing for homeowners with poor credit. While mortgage brokers can be an excellent resource for refinancing mortgage you have to be careful when working with one to avoid overpaying.
You can learn more about refinancing your mortgage during this time of economic uncertainty with our free mortgage refinancing video tutorial.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
