Monday, January 29, 2007

Cash Out Refinancing - A Solution To High Interest Rate Debt

I recently found out that the actual number of homes lost to foreclosure is unknown. The reason is that there is no central database that tracks that number. Deeds that indicate a transfer of ownership are filed in court. I was surprised that know one digitally compiles data even within a city to ascertain true difinitive foreclosure stats. Case in point. Atlanta Georgia listed some six thousand home destined for foreclosure. At least 900 ended up being foreclosed.
What are the common causes of this seeming epidemic of defaulting on a loan?

Identifying Debt Problems and Solutions
Utimatley it has to do with a large number of homeowners existing on low to modest incomes and contending with a volatile loan product, namely adjustable rate mortgages (ARMs), option ARMs and interest-only mortgages. ARM's fluctuate with changes in the market. Monthly payments are likely to go up as interest rates increase. Adjustable rate mortgage programs can only set one up for problems later down the road. What is the solution. In these situations there is no quick fix. Counselors would advise that they enroll in a debt relief program that allow them to work out a low payment deal with creditors including a consolidation program if able.

Cash Out Refinancing Alternatives
The Alternative to this would be home loan refinancing. Cash out or cash back mortgage refinancing allows the homeowner to enter a new mortgage loan program usually going from an adjustable rate program to a longer 15 - 30 year fixed rate program.