Ways to Renegotiate Your Mortgage

If you are like many Americans struggling to make your monthly mortgage payment, you are not alone.  While the current economy has many struggling, the good news is that banks are more likely now to work with you than ever before.

Because banks have had to foreclose on so many homeowners, they would rather negotiate with you than have another foreclosure where they will likely lose money.  Banks want to get paid, and they now understand that the best way to get their money is to work with you, the borrower.

What You Need Before You Begin to Renegotiate

If you would like to renegotiate your mortgage, you will need several documents to prove that you are having a hard time making your payments.  You’ll want to round up your credit card statements, loan statements, unemployment information (if applicable) or your last paycheck stub, your last two years’ tax returns, and your checking and saving information as well as possibly other investments you have.

Ways to Renegotiate Your Mortgage

There are two main ways you can renegotiate your mortgage.  Which way you chose depends on several variables.

1.  Work with the lender.  Call the lender and honestly tell them that you are having a hard time making your monthly mortgage payment.  You will need to also tell them why you are having trouble, whether that be because of job loss, an injury or illness or another reason.

Ideally, the best time to work with the lender is before you fall behind on your payments.  This was not traditionally the case, but times have changed, and the lender wants to hear from you and work with you as soon as possible.

2.  Consider refinancing.  If you have more than 10% equity in your home and a credit score of 720 or higher, you may be a good candidate for a refinance.  Refinancing can lock you into a lower interest rate and give you a lower monthly payment that you will be able to afford.

While you may initially work with your own lender on a refinance, that is not your only option.  You can contact a mortgage broker who can help you find the best offers, or you can look around yourself and compare rates.  If you belong to a credit union, don’t forget that credit unions often offer lower rates than banks do.

In addition, consider changing the terms of your loan.  If you have a fixed rate mortgage, a 5 year adjustable rate mortgage may give you some breathing room with a lower interest rate and lower monthly payment.  This alternative is especially attractive if you plan to move within 5 years.

If you are having trouble making your mortgage payment, don’t despair.  You are certainly not the only one who has been in this situation, and you will likely find your lender willing to work with you.  Even if your lender isn’t, there are likely other lenders who will work with you and be glad to get your business.  Remember, in general renegotiating your existing mortgage is easier than getting a new mortgage.

source: everythingfinanceblog.com

What alternatives are there to bank loans?

Unless you have failed to pick up a newspaper in the last four years, you will be aware that bank lending to both consumers and businesses has plummeted.

Despite various measures designed to ease the flow of credit, the truth is that for many people it has never been more difficult to access funds from traditional lenders.

Inevitably, that has led consumers and businesses to explore other avenues – some good and some not so good.

Today, you can apply for finance from various institutions, including banks, online pawn shops, credit unions, payday loan and cash advance providers and more.

Below, we explore each of these options and look at the pros and cons associated with them.

Online pawn shops

The concept of an online pawn shop may be one that is difficult to get your head around given many people’s ideas of what pawn shops are like.

Instead of loaning against cheap jewellery and various household items, the new, high-end asset lenders that are emerging provide loans against valuable items ranging from fine wine to prestige cars.

They provide short-term loans taken out for between one and six months and once the loan has been repaid, your assets are returned to you.

Interest rates tend to be higher than those associated with bank loans, however, the loans are designed to cover you for a short period of time and only become unsustainable if you fail to use them properly.

Many middle-class individuals who are asset-rich but cash-poor use pawnbroker loans to ease their immediate financial concerns, so if you are of the opinion that pawnbrokers are for the poor and unemployed, you are mistaken.

Payday loans

Payday loans have been heavily criticized in recent years as they have become more popular.

Essentially, you borrow a small amount for anything between a few days and one month and repay the loan once you have the funds to do so.

However, these loans charge an eye-watering amount of interest and many firms have been guilty in the past of imposing hidden charges, therefore making them even more expensive.

The real problems arise when borrowers cannot meet the repayment date and the debt is rolled over, which can see it snowball to such an extent that people cannot afford to repay it at all.

Credit unions

Credit unions are small not-for-profit bodies established and controlled by members with a common link.

That link may be through a trade union, a local community or another connection. There are no shareholders to worry about and any profit taken by the organisation is used to develop it further.

The interest rates charged by credit unions are often lower than those attached to pawnbroker loans and are significantly lower than payday loans. Also, terms can range from five years to 25 years depending on whether the loan is secured or unsecured.

Another benefit is that as a member of the union, you have voting rights and an influence over how it moves forward.

As you can see, banks are not the only places you can go if you need a loan.

Change can be hard for some people to handle and if you are one of them then that is fine. However, the financial landscape is not what it was four years ago.

Doors that were once open may not be any more, but new doors have opened in their place in the form of pawnbroker loans and other alternative forms of credit.

source: everythingfinanceblog.com