Manage Your Mortgage Before Default Looms

By Richard Barrington Columnist

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In the dictionary, default comes shortly before denial. In real life though, denial often comes first. With mortgage foreclosures up sharply, it is well worth reviewing strategies such as refinancing that can help you avoid defaulting on your mortgage obligations.

Where denial comes in is that people often avoid dealing with a problem until it is too late to take effective action.

Foreclosures: A National Epidemic?

The reason this issue is so important now is that foreclosures are on the rise. In May of 2007, mortgage foreclosures rose to a rate of one in every 656 households. That's a 19% increase over April's rate, and a 90% jump in the foreclosure rate of one year earlier.

Refinancing to Make Debt Manageable

Avoiding foreclosure means overcoming denial and considering options such as refinancing. Refinancing can help you manage your debt burden in a number of ways:
  • » Even though mortgage rates have been rising lately, they are still lower than they were over most of the past 30 years. Compare your existing mortgage rate with current programs, such as hybrid ARMs. Refinancing may still give you an opportunity to get a lower mortgage rate.
  • » Refinancing your remaining balance over a longer time period is another way of lowering your monthly payment. While this means paying more in the long run, if those more manageable payments mean you don't have to default it may be well worth it.
  • » Refinancing from an adjustable to a fixed rate mortgage will take the uncertainty out of your debt. People are finding out with a shock what rising mortgage rates can do to their monthly payments. If you don't want to live with this risk, a fixed rate mortgage is the way to go.
CNN Money

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.

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