Mortgage Refinancing – How to get it right.

Most individuals after the initial euphoria of having a mortgage for their homes, awake to the harsh realities on ground that the loan rather than being a solution is indeed a problem. The individual is now saddled with the responsibility of knowing that whether on a long or short term analysis of the facility so obtained, the end results would be far from being considered favourable. Also, as a strategic reconsideration after the signing of the agreement with the creditors, the individual might desire to include certain assets originally left out and which may now be able to cushion the effects of the facility conditions. The reasons why all this happens abound; however, the only viable “out-let” to this situation is commonly referred to as “Mortgage Refinancing“.

Mortgage refinancing simply put, provides the individual with the opportunity of replacing one’s current mortgage with a new loan frame-work having a more friendly interest regime and an easier repayment management option. The individual by this facility will have enough funds to tidy-up the current mortgage obligations and then use the balance funds to attend other pressing wants thereby placing the individual at an advantage.

Some reasons why most individuals opt for mortgage refinancing are out-lined as follows:

1.     To reduce or alter the anticipated risk profile associated with the current package.

2.     To obtain a lowered monthly repayment amount.

3.     To allow a long term arrangement that will result in consolidating all debts into a single loan.

4.     To liquidate more cash to service other financial responsibilities.

5.     To take advantage of lowered interest rates being offered on a long term basis.

At this point also, it is note- worthy for the individual considering mortgage refinancing to understand that in addition to the advantages outlined above, mortgage refinancing should only be embarked upon for the right reasons and at the right time. This simply means that the individual in other to get the best results from the option of refinancing must know at every point in time the value of one’s property. The value of the property should be appreciating for this will give the individual the requisite favourable bargaining advantage. More so, the individual must investigate the interest rate being offered in the new deal. The new rate be offered should be between 2% to 5% lower than the current interest rate. Also, as regards the timing, if the current mortgage package has few more years to terminate (i.e. having between 2 to 5 years) the individual can opt to see the facility through and thereby avoid sinking further into debt since one can be debt-free in a short future. Furthermore, the individual should carefully read through the current mortgage agreement to investigate if there are any penalties attached to the condition of “terminating” the agreement before the due date.

Mortgage financing is indeed a strategy not for everybody thus, before you make any concrete commitment in this regard, be sure to ascertain that the new deal will actually be beneficial.

Financial Bankruptcy – How to save yourself.

The individual is often exposed to the interaction of complex financial mechanisms which do not always place one at an advantage. The desire to satisfy the basic needs of life often exposes the individual to taking options that most times leads to them becoming debtors to financial institutions. At the zenith of all this, the individual may have to seek debt consolidation as a remedy; however if disqualified by prevailing factors, the individual is then classified as financially “bankrupt”.

Bankruptcy simply refers to a situation where an individual is denied and also unable to secure any more forms of credit life-lines by one’s bankers. Bankruptcy actually places the individual in an embarrassingly “small space” since the person can no longer operate any bank account until given a clean financial bill. In financial circles, bankruptcy is considered an essential tool for “establishment health” as it tends to deal with the technicalities involved when individuals borrow fresh loans to pay-off a batch of former loans when it has been established that the proposed current asset portfolio cannot back-up the loans already obtained or being sort for.

The initial stages of bankruptcy begin with the inability of the individual to settle creditors. The bills continue to pile and despite the sincerity of the individual, all efforts put into remedying the situation prove abortive. The individual upon the expiration of the grace-period being offered by creditors who follow with efforts put in motion to get the individual classified as being bankrupt. This form of bankruptcy is termed “involuntary bankruptcy”. Creditors tow this line of action in an effort to recover a portion of what they are being owed in addition to conforming to institutionalized provisions on internal and legal issues.

Also, the individual having viewed the circumstances could personally file a bankruptcy petition. This type of bankruptcy is then termed “voluntary bankruptcy”. As sad as one could imagine, bankruptcy could be the only way an individual can handle debts that one cannot pay. All assets owned within this period have to be forfeited to aid the settlement of debts owed. However, bankruptcy frees you from all debts and also provides you an opportunity to build your credit status afresh usually after a period of one year.

Some of the ways to avoid going bankrupt are outlined as follows:

1.     Obtain quality financial counselling.

2.     Develop and adhere to a spending plan.

3.     Avoid taking on more debt.

4.     Talk and address issues extensively with your creditors.

5.     Consolidate your debts.

Above all, get informed in all facets on issues related to bankruptcy so as to avoid all pit falls and thus maintain a healthy financial status. Cheers.