©Idea go - freedigitalphotos

©Idea go – freedigitalphotos

Many subprime lenders have provided homeowners with complex non-traditional mortgage agreements that allowed them to get into homes that were otherwise too expensive. These mortgage agreements typically have lower payments during the first few years that increase–sometimes dramatically–after the introductory period. The homeowner is then faced with a monthly payment that is often much higher than they can afford. After months of late payments, missed payments, and increasing penalties, the lender often times begins the process of foreclosure.

Stuck with a non-traditional mortgage loan as a result of predatory lending practices? You may be able to refinance your loan and lock in a new lower interest rate. This may help you to avoid skyrocketing monthly mortgage payments, and it could be the key to avoiding the foreclosure process altogether.

Improving your credit score may help you secure a fixed-rate mortgage. The reason you had to get a variable rate mortgage in the first place was likely because the interest rates on a fixed rate mortgage were much higher. With an improved credit score you may be able to get into a new fixed rate mortgage loan with a reasonable interest rate. These days interest rates are at historic lows, and the Fed has continued to keep rates lower to encourage and spur economic activity during the current recession. Typically it takes about 12 months of on-time payments to build your credit back up. If you have consolidated other bills into one payment make sure you can handle the new payments. Regressing back into late payments can really hurt your chances of digging out of the hole caused by a foreclosure on your credit report.

A single 30 or 60 day late payment on your credit reports will typically not have a serious effect on your credit score. In many cases, your credit score will recover when you make your past due payments and the account is no longer reported as currently past due. As long as you are not continually past due on your payments, your credit score should escape from being too damaged.

A 90 day late payment, however, is a serious negative mark on your credit report. In fact, it does not matter whether or not the account is listed as currently past due. Either way, the late payment can significantly impact your credit score.

Many homeowners are struggling to make even their new modified payment plans, and are having difficulty get back on track. With unemployment rates at the highest rates in years, it is easy to give up and give way to the deep hole of debt that has become routine in too many American households. It is important to understand that YOU CAN REPAIR YOUR CREDIT AND GET BACK ON TRACK! Speak to a credit repair specialist today and get back on the path of recovery.

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One comment

  1. […] to be eligible for another (conforming) mortgage.  This 3-year period is a critical time, to build your credit back up and get back on track with your finances if you plan on buying another home in the […]

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