In today’s economy, many families are struggling to maintain their mortgages and stay out of foreclosure. When it comes to saving your home there are several options to choose from. However, not all may be the best for your current financial situation.
With interest rates hovering at record lows many people have been offered refinancing solutions. While refinancing is one way to lower your monthly payment, it isn’t a solution that should be pursued without prior investigation. Refinancing a mortgage will cost you time and fees. When you refinance your mortgage you will be taking out a new loan, which will inevitably extend the life of your loan. If you had 20 years left on your existing 30 year mortgage, taking out a new 30 year loan will reset your clock to zero; leaving you with the full 30 years. Refinancing also will require out of pocket closing cost fees, which can easily run upwards of $2000. Be sure that you can afford these fees and that paying them is cost effective in the long run. A good rule of thumb is that refinancing should lower your payment by several hundred dollars each month in order to be worthwhile.
Of course, there are other alternatives to foreclosure such as loan modification and a short sale, both of which cost very little out of pocket. However, loan modifications are hard to come by and short sales will leave you without the property in the end. Filing for bankruptcy can also save your home from foreclosure. However, it is important to consult a Fort Worth bankruptcy attorney prior to making the decision to enter bankruptcy as an effort to halt the risk of foreclosure.