Bankruptcy

Two Ways To Pay Off Mortgage And Avoid Bankruptcy

Extended term mortgages often push people towards the kind of financial crisis, where they find no other option but to file a petition to be declared as bankrupt. But, if you think with a cool mind and follow the right approach, you can still find several ways to pay off your mortgage and avoid bankruptcy. Long-term mortgages, such as for 30 years or 50 years, may look like an attractive option, as the monthly payments in such cases are very low, but if you do a thorough analysis, you will realize that you are actually paying (throughout the life of the loan) three times or even more than what your home is worth. It is because of this long-term (seemingly never-ending) liability why people often get trapped in debt. The financial indiscipline further makes the situation worse. Following are two options that you may like to try in order to get out of the debt trap and to put your finances back on track.

Move To A Smaller Home

A great strategy that is likely to work is to sell your existing home (with extended term mortgage) and move to a smaller, decent home. This way, you will be able to cut the fat from high mortgages. You will end up having a lower mortgage, with lower interest rates, and with a shorter loan term. All these changes should provide you an excellent opportunity to regain control of your finances and avoid bankruptcy.

Refinancing

Another great idea to pay off your mortgages easily is through refinancing. People generally consider extending the loan term so that they can enjoy the lower monthly payments, but this strategy does not really work. Therefore, if you already have a 30-year loan, it does not make any sense to extend the repayment period to 50 years. A better strategy to save your home and to avoid bankruptcy is to refinance it for a shorter term, such as 15 or 20 years. This will obviously result in higher payment, which you may not be able to afford. But, there are still several things you can do to afford the higher payment. For example, you can get the extra money by refinancing your auto loan by extending its loan term from 5 years to 20 years; this should help you save enough money to make up for the additional requirements for the mortgage payment. Though the mortgage payment will increase, when you keep in mind the significant reduction in the monthly payments of other debts, you will realize that your overall consolidated monthly payment has actually come down to a very low amount. Remember, this strategy may also mean making some tough decisions, such as selling your luxury assets like boats and RVs to get the much needed extra cash.

No matter which option you choose to go for, you will need to implement a healthy lifestyle change, mainly when it comes to dealing with financial matters. Always remember, budgeting plays a key role when it is about paying off your debts in order to avoid bankruptcy.


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Posted in Bankruptcy, Bankruptcy Alternatives | 1 Comment »

One Response to “Two Ways To Pay Off Mortgage And Avoid Bankruptcy”

  1. Diana says:

    Great thought indeed. Always decide the loan amount your pocket could afford. Actually it looks like a good investment option but in the long run we have paid twice the amount because rate of interest is pretty higher. To lower the monthly installment we increase the tenure which means incresed interest and boundations. A person don’t feel free unless and until he repays the total amount. And if the loan amount increases the tension to your pocket its better to sell off the existing property and buy a small one that your pocket could afford.This only will increase the mental pressure and peace of mind will be disturbed after all we are investing for a good and sustainable future and if our quality of life is hampered by the worries of future repayment so for what are we investing . So be sure about the focus in your life . Set the priorities and invest only that much amount that you can afford. So if we become victim of bad credit repair it ultimately turned into bankrupty.

    and once we are declared bankrupt all our property will be mortgaged and our life will become miserable. And the future is in dark and could not apply for any loan

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