Should I Get A Second Mortgage To Pay Off Bad Credit Loans?
If you have bad credit loans and your mortgage payment has increased because you missed several payments, will you consider getting a second mortgage?
Home owners with existing first mortgage know that personal circumstances change, mortgage interest rates increase and defaults often lead to foreclosure and forced sales. If you cannot afford your current monthly mortgage payments and you have existing bad credit loans or numerous credit accounts, losing your home is just half of the problem. The other half is getting back your credit rating so you can qualify for other loans to save your home, pay your existing debts and possibly have a little surplus to start a profit-generating project.
Here are some questions to help you decide whether or not to get a second mortgage to pay off bad credit loans:
Can you afford to pay your loans?
Anyone can face a financial difficulty. In fact, not even the most popular millionaires are spared from financial troubles. The only difference is that they recover easily because they know what to do. When faced with a serious debt situation, it is important to realize that there is always a way to solve it. First, you need to consider your current assets-the ones that you can easily convert into cash. If your house is on mortgage and you’d like to repay the amounts you missed to save it from foreclosure, look into your bank accounts, emergency funds, retirement funds, stocks or other financial resources. However, if you’ve exhausted all your liquid assets and it is still not enough to repay your debts, it’s time to look into alternative financing options like getting a second mortgage. Not only, it will help you to pay your first mortgage, it is also an excellent tool to consolidate your loans.
Debt consolidation through second mortgage can increase your credit score by reducing the total amount of debt. It brings the utilization rate of all your credit card accounts to zero, since you don’t owe anything to those credit card companies anymore. You only have one loan left—and that’s the second mortgage. It is predominantly helpful to those who are in between jobs, or whose household income has reduced and can no longer afford their monthly mortgage payments. If you think you cannot make payments on your debts, especially your first mortgage, and you really want to save your home—get a second mortgage from reliable mortgage companies like NSW Mortgage Corp as early as possible.
Are you ignoring the debt problem for too long?
Dodging phone calls or letters from your mortgage lender, credit collectors and utility providers won’t help. Ignoring these payment reminders, especially about your mortgage interest rate or payments can end in forced sale. So, prioritize mortgage payments before you settle all other bills either by raising funds or by consolidating your debts through a second mortgage. Don’t try to pay off your bad credit loans and mortgage dues with bad credit loans, unless it is a low-cost loan with clear repayment terms. They usually come with very high interest rates and will just add to your tons of debts.
What are the causes of my financial troubles?
You can classify them into two: long term and short term causes. If you have been spending beyond your income each month, what are you spending your money on? If, 50% or more of your income goes to your debt repayments, you are in serious trouble. The truth is that your debt repayments must not take up more than 30% of your monthly income so you will still have money to pay for your daily necessities, and a left-over for your retirement and savings accounts and investment portfolio.
What’s in your credit mix?
Do you have credit card accounts, mortgage, overdrafts, consumer debts, unpaid utility bills and bank loans? The types of loans or debts you have basically sums up your current financial standing. If you can barely pay the minimum on your credit card accounts, and you still have unpaid bad credit loans with interests and charges that keep on adding up, it may be hard for you to recover without looking for an affordable loan that will consolidate all your debts.
Do you want to change the way you are handling your debts?
You can get a better deal on your mortgage, pay off loans secured against your home and pay your mortgage with a second mortgage. But, it is equally important to change the way you are paying your other debts that are not considered a priority, like your credit card and personal loans. Don’t wait for a payment holiday, or for your lenders to forgive the interests on your overdue accounts. However, those things would naturally come up as you consolidate your debts. One thing that can really help you change your debt management strategy is a good loan product that simplifies payments, reduces your interest and ensures that your schedule of payment falls on the date when you are most likely to have money.
Talk to the in-house bad credit loans specialists of NSW Mortgage Corp today to learn more about your loan options such as second mortgage and other easy-to-pay and low-interest loan products.