Retire On Track LLC.
Can Mortgage Modifications Enable Better Debt Consolidation?
When you are looking to consolidate your unsecured debt - credit card bills, student loans, medical bills, store credit cards and other expenses - you'll find that there are various options available to you. Before you start to actively pursue those options, however, it's a good idea to take a look at mortgage modifications.
Mortgage modifications have little to do with debt consolidation in a traditional sense, but they do allow home owners to focus on restructuring the loan that they currently have rather than refinancing - after all, refinancing a mortgage is just a fancy way of saying that you apply and are approved for a loan that will let you pay off the mortgage that you have. Refinancing, then, if you compare it to debt consolidation is a lot like taking out a debt consolidation loan. Often, you just sway one debt for another - albeit usually at a better interest rate.
On the other hand, mortgage modifications are usually worked out with the bank to simply change the terms of your current loan. With mortgage modifications, late penalties may be removed from the amount that you owe, payments can be lowered or the amount of time that you have to repay your mortgage can be extended.
Ultimately, when you are looking into debt consolidation, you aren't going to be looking to pay off your debt over an extended period of time; when you consolidate your debt, chances are good that you won't want to still be making payments against your current debt thirty years from now. However, when you are working with an agency that is experienced and that has staff members who can advocate for you with your creditors, you'll find that better arrangements can be made.
Your debt consolidation company will be able work with your creditors to arrange for lower monthly payments, eliminate finance charges, over limit fees and reduce the interest rate that you're charged. More importantly, you'll find that you are able to make a single monthly payment and still know that all of your bills will be paid (and on time). Rather than just taking out a new loan and having a new debt, you'll be working with your current creditors, improving your credit and reducing your debt. You'll also be able to learn more about what you can do to change your spending and saving habits so that you will be able to stay debt free once you've worked your way out of your debt.
While loan consolidations aren't exactly like mortgage modifications, you will find that you are in a position in which you are able to take control of the debt that you currently have and to have a strategy in place that will let you know that you can reduce the amount you owe - eventually eliminating your debt altogether. The premise behind modifying a loan is simple: it just changes the repayment terms - making it a great model for those who are looking to consolidate their debt and plan for a financially secure future.