Option #7: Refinance to get another 1st loan

What was the one thing you did in the past that is most responsible for your present situation? It was getting the home loan in the first place! Let’s face it; another loan is not the solution!

Sure, you’re thinking that it couldn’t have been avoided, but that’s not the point… A bad loan is bad, and a worse loan is worse. There is no such thing as a good loan, and when they have really high interest rates or work in teams, (1st and 2nd loan at the same time) then you’ve ensured that your financial future is going to be very bleak.

Another loan will buy you a little bit of time but you will ultimately be much more likely to wind back up in this position again.

You may get a month or two of skipped payments, and your payments may even be a little smaller due to some creative restructuring of the loan product they have, but in the end it is sure to make finances harder for you by having some form of delayed or even hidden increases or fines that you won’t be able to afford at that time… And if it didn’t have them, it simply wouldn’t be a profitable loan for the loan officer to offer to you. Who wants to lend out a large amount of money out without it being profitable?

Let’s not forget that it will be very hard for loan officers to get you a loan right now anyway, because of the recent bashing that your credit report has taken. Any loan that you are being offered at this time is a very undesirable loan, most likely the type of loan that is an interest-only, balloon payment or too high of a rate loan that will simply be impossible to pay off until you’ve hit the powerball!  

Pros:

Your foreclosure will be stopped with your lender, as a new loan will be started elsewhere, paying off that original loan. You’ll also get a little time without payments, 1 or 2 months, to catch up financially. 

Cons: 

Where do I start? First, you’ll be financing more money, making your equity that much smaller. Second, your new loan can’t possibly be as good as the old one, and that old one is what got you into trouble in the first place. Third, you can’t even get this bad loan without SOME equity, and if you’ve let too much time go by, your credit will be too bad to be considered. And finally, this does nothing to help your credit report, the Notice of Default and anything else you’ve gathered on it to date stays put!

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