Bad Credit Refinance- How to get rid of your bad credit mortgage

The biggest debt you will ever have is a mortgage. It stays there for ever and hardly peels off anytime. In fact every mortgage holder in America has an average of $173,876 in debt secured by a real property according to CNN money. Mortgage debt is a good debt to have because the mortgage payments are tax deductible. Other kinds of debt like credit card and loans are not so kind with taxes.

So how do you get rid of this biggest debt that you own ? We provide you with few methods given below depending on your circumstances and economic outlook and money management skills.

Bad credit refinance to cut down your loan

By reducing the term of the loan you can reduce the the time it takes to pay off the mortgage. If you refinance from a 30 year loan to 15 years even though your mortgage payments will be higher they will be at lower rates and your mortgages will be paid off in lesser time. From full 30 years amortization now you have a 15 year amortization and it cannot get any better. The principal gets paid off much sooner and hence the mortgage debt. It may or may not suit your cash flow and that is something you need to carefully evaluate.

Making Biweekly payments

The key here is to make extra payments to reduce the mortgage amount. Instead of making 13 monthly payments which a typical homeowner does , make 26 biweekly payments in a year. It will depend on your present financial situation if you do that every other week or not. This will cut down your loan from being amortized from 30 years down to 22 years over time. The principal will get reduced quickly and therefore it will also lower the time taken to pay off your loan, peeling the onion little more every month.

Sell your home

Sometime the only way to clean out your mortgage is to make a sale of your property and buy something smaller with a smaller mortgage payments. This is by far not such readily available option unless you are able to sell your home in this economy quickly and efficiently. But if you have lots of equity you can take a note back and get rid of that mortgage with the buyer qualifying for the amount of your loan.

Walk away

If your circumstance hardly allow the mortgage to be repaid properly its called the strategic default option. You simply walk away from the loan. In some states the lender may start a judicial foreclosure and may come after the borrowers, for the amount of loss, but in Trust Deed states like California and others,  the property is the only re-course for the lender. This is by far the least desirable option, but you have to weigh the pros and cons and talk to an attorney about your situation.

These are the few options that have been used by borrowers lately and they each work in various circumstances. There are no hard and fast rules for these options and one can use a combination of methods outlined here, and still come out ahead.

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