There is no understating the fact that when you have good credit you WILL NOT need a bad credit mortgage refinance. Yes, there are viable situations where a bad credit mortgage refinance can certainly help. If you are a senior at the age of sixty two and your credit score is under about 575 and you have some equity in your home, you might be able to negotiate a lower interest rate on your fixed rate mortgage with your lender. But really, the only instances where you will needlump sum cash for a mortgage refinance is if your credit is simplyraw.
A quick way you can be able to get yourself into one of these circumstances, is if you are about to be foreclosed on your house. In almost all cases those who have reached a point where they can no longer afford their monthly mortgage payment, whether due to adjusting interest rates or just plain worn out, will now be faced with the very real possibility that they will be overburdened by their mortgage payment. In times like this it just makes sense to take action now before it is too late. The best and definitely the most likely way to go at this time of trouble would be to take out a bad credit home loan.
A bad credit home loan (or any loan for that matter) is an excellent way to wipe your credit history in preparation for a new beginning. It is common for people to fall into financial deep water at times. When credit cards are maxed out, loans are either never paid off or always late. Credit is destroyed everyday from people not being able to keep up with payments and once it happens it is very hard to get back in the game. This is exactly where the home loan loan refinance comes in. Since you cannot possibility go back into the market to re-stock your credit, you are really forced to refinance your mortgage with the hope of getting a new mortgage payment with a lower interest rate. Now this is not an option if you have proper credit for any financing. But lets get real, when is the last time you needed a major purchase and that is a used car that needed new tires? Do you have kids to send to college? Calculating interest on a loan will not give you an answer, it will give you a snapshot of how much money is wasted. Later we will look at how to determine interest rates for different loans but first we need to understand why the interest rate varies so much on these home loans.
As stated above the sub prime mortgage crisis started because individuals were playing the market based financial system. They were able to buy houses that were either worth two or three times the value of the home and then they refinanced every few years. While this may have been acceptable on a personal level at one point, it is not a recommended approach to financial planning for the average consumer. The sub prime home loan refinance left people with properties that had no equity and now they were stuck with a loan that either required them to make payments they could not afford or left them upside down on their house. This abundantly confusing financial environment left many people without jobs, without homes, and many faced with defaults and bankruptcy. When the financial markets started to turn around the housing market almost immediately imploded sending the real estate market into complete free fall. This event left millions of people jobless and home owners upside down and into default with their mortgages. When ratings start to decline and corrections do not fully stabilize the economy and the US goes back into a recession unemployment will increase drastically, even reaching the middle class. At the same time credit card defaults, foreclosures, and bankruptcies hit the recordades like a tsunami and dollar scoreifies.
This economic disaster has affected Governments, the banking industry, and consumer confidence all of which have an correlate effect on consumer credit. We have seen a hyper tension in the financial sector globally with sub prime loan defaults nationwide spiking to an unprecedented level. Now, growing numbers of people are stuck with loans they cannot afford or are going into default. Banks and financial institutions have become a sharks circle from which on we have yet to recover fully. We are well aware that consumer debt has reached levels not seen in the history of mankind to such an extent. The public debt of every nation on the planet is ignored and the facts are now clear for everyone, even the politicians.
We have seen situations where the consumer debt has reached such levels that it is next to impossible to repay the debts due to the outstanding interest. Refinancing is not a viable option in these cases because housing prices are evaporating and no one can afford to refinance rapidly in this market under these current conditions. This is why so many people have foreclosures on their record because they are upside down on their mortgages with essentially no equity to recover the outstanding loan.