Many want to divest their debt when the economy is so bad. Trying to get a better interest rate with a mortgage loan modification is an idea when many still pay off their extra debts by just getting a second mortgage. When the market began to tank, that’s when those strategies began to backfire. True debt settlement relief may be harder than you think, and you have to be very careful about who you contract to help you.
Fixing debt with more debt?
Before the real estate market took a nosedive, it was common for individuals to either refinance or take out second mortgages to pay other debts, such as their credit cards. This is like borrowing debt from one to pay the debt of another. It helps to refinance right now when mortgage rates are less than 5 percent. However, according to Newsday, that is if you have the credit rating to qualify. So when you have any negative dings on your credit score, you may not be able to get a cash loan from your budget with a lower rate if you can’t qualify.
Debt counselors as wolves
You also have to be careful of who you go through for debt consolidation. Getting a personal loan and doing it yourself can often times be better. You can get help doing this from non-profit organizations like the National Foundation for Credit Counseling. There is no charge for the services meaning you are able to get out of debt without an additional payday loan. Many have bad credit ratings now meaning their debt consolidation loans they receive may have higher interest rates than they have now, which means more will be paid in the end of it all.
FTC prefers dirty debt practices to be gone
For a long time there has been talk of financial reform. The Federal Trade Commission is working to make it extremely hard to have debt relief services that are dirty. According to the Washington Post, a debt consolidation service can’t charge a fee in advance and has to disclose all potential costs to customers.
Additional reading at these sites
Washington Post
washingtonpost.com/wp-dyn/content/article/2010/07/29/AR2010072905958.html
Newsday
newsday.com/classifieds/real-estate/how-to-refinance-your-home-with-low-interest-rates-1.2200971
