5 Ways for Avoiding Mortgage Debt

When you first own a home, it feels like a dream has come true. You have a little place on earth that you can call your own. But once you realize that you also have a financial burden that is staying with you for many years, it becomes a lot less dreamy. When reality hits you, you’ll begin to wonder what kinds of risks you have on your shoulders. Debt is something that many first-time homeowners face when they are trying to hold onto their property but they don’t have the right amount of income coming in to save them. Personal debt that is tied to a property is something that you need to avoid if you can at all. Here are 5 awesome ways for you to sidestep any mortgage debt that could befall you.

Ask for a loan extension

Mortgage extensions are great for when you’re in trouble and you need a little more time to pay off your mortgage. But will lenders go for it? Yes actually, they do and it’s because they know that you’re not going for the nuclear option, which is to just default and serve the property up as collateral. Guess what? Lenders don’t want to go through this headache of reacquiring your home, selling it off and doing all the paperwork that comes with it.

For example, you have a mortgage that is $200,000 but you want more time to pay it off. Your APR is 4% and you have 20 years to pay it off. Your monthly payment is $1,200 and this is something that you just cannot manage. What if you extended the time from 20 years to 25 years? Just five more years could knock off $150 a month and that would mean you pay $1,050 a month instead. This would mean that you end up paying more due to the interest which can total $25,000 but you will have more time to get your finances in order.

Cut your expenditures

Yes of course, here comes the ‘c-word’. Cutting is the number one strategy for avoiding debt because it’s simple, and everyone can understand it. But you have to know what to cut. Cutting your grocery shopping isn’t going to do a whole lot in the short-term and if you are at the cusp of going into debt, the last thing you need is to make small useless cuts. 

Cutting expenditures is the way forward out of debt. So what are the things that would be on this list?

  • The holidays are canceled for now. You cannot spend thousands on a holiday when you know the problem that you’re leaving behind for a sunny beach, will be there when you get back, and most likely even worse.
  • Don’t buy new assets. If you were thinking of buying a new car, don’t! These types of large scale expenditures won’t help the situation. You must try to make do with your current car and make improvements to it if you can. 
  • Don’t buy expensive things such as premium clothing or accessories. Watches, necklaces, or handbags are items that will immediately lose their value once used. So they cannot be thought of as investments per se.
5 ways to avoid mortgage debt

Meet with a debt specialist

Debt specialists are incredibly useful because they know the ins and outs of debt laws and regulations for lenders. What you can do is Inquire with Debt to Success System which can help you get out from under debt if you have a mortgage. Even if you have a second or third mortgage piled onto the original, the specialist can help you to unravel the issues and eliminate the debt. Even if you have a low income, they will help you. They believe that if you have a loan that is over $25,000, they can help you pay just a fraction of it while avoiding going into debt. They have a 4-step approval process which can be done online. If you’re unsure, just check the quote system they have on their website.

Bank of the parents

Hey, we all run into hard times and sometimes we have to swallow our pride and ask our parents to help us out. Financially speaking, this is a challenge that may or may not be palatable for them. However, unlike mortgage lenders, your parents may not set a tight timetable of repayments. They could pay off your debt and then you could figure out and agree on a schedule of when and how you are going to pay them back.

It could go something like this. 

Your mortgage is $100,000 and your current repayments are $1,100 a month for 20 years. You could have your parents pay all of that or half of it, and work out a deal to pay them half the amount that you normally would for the same amount of time. And then end with one final lump sum payment to finish up. Any kind of deal that you can think of, can be made which is why the bank of dad and mom is so alluring.

Debt consolidation

You may not be in debt at all, just struggling to make payments for your lenders. You have the funds but maybe they are taking too much too quickly? Then using debt consolidation, you can make all your payments into one payment and then have the schedule extended far beyond the normal scope of what lenders would normally agree to.

This allows for a centralized approach, so you only have one bill to worry about every month instead of several. The time can be pushed back from 15 years to 30 years or more. However, you may also need to increase the collateral you’re willing to server up just to reassure your consolidator.

Everyone can avoid debt if they know how to. Mortgage lenders can be spoken to and asked for extensions and they will probably agree. If not, limit your expenditures and use the other methods listed.

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