The purposes of credit counseling include helping you evaluate
your current financial situation, learning about the
contributing causes of financial hardship and the ultimate goal,
debt relief. Many recent homebuyers that chose adjustable rate
mortgages (ARMs) did so because they planned on refinancing in a
couple of years when their credit score was better. The trouble
is, few of these homeowners actually saw credit score increases
because their massive credit card debt remained high.
Now that these loans are over 2 years old, the payments are
going up. In some cases, mortgage payments have nearly doubled.
Distressed homeowners are trying in vain to refinance in order
to lower their payment, yet they cannot get approved for a
favorable fixed-rate mortgage because of their high credit card
debt and low credit score.
Beginning in March 2007, underwriting guidelines on subprime
loans became more stringent. What this means is that it will be
even harder to refinance your existing ARM. If your payments
have gone up, then you may wish to consider addressing the other
problem, which is credit card debt. Reducing your credit card
minimum payments can ease up your budget to allow for more money
available for your mortgage payments. Better yet, as your debts
are eliminated, you can improve your credit score over time.
This will allow for improved refinancing opportunities in the
future.
If you are struggling to make your mortgage payments, consider
meeting with a credit counselor today. Make sure that the agency
is reputable. Also, you should seek help from agencies that
offer housing counseling in addition to credit counseling. There
may be several mortgage delinquency and loss mitigation options
that you can discuss in addition to credit counseling.
