How Judgments on Your Student Loan Affect Your Mortgage Refinance

Young people who need to start a new life and a new family will always look forward to purchasing a new home.  As in most cases this should be easy, mainly if your college student loan reputation is good but what if you have missed some payments and already have a judgment on your student loans?

Student loan information already make it not easy to acquire a mortgage but a judgment could cause your application way more difficult and might actually influence the success of your loan.

How Lenders Look At You

Your student loans on college are not the only consideration your creditors will take a look at in case you need a mortgage refinance from them.  They will review the complete picture – your student loan payments record – which will include all single cent you borrowed that has been recorded.  This will include your credit card loans, car loans, mortgages and all other kind of obligation you might have.

Your creditors may also take into account the cost of the house you’re intending to buy, the kind of mortgage and your earnings.  If you’ve had a judgment on your college student loans, this could trigger your creditors to sit up and be wary of you.  They can either absolutely refuse you for a loan or elevate your mortgage refinance rates.

Should the first scenario happen, you might need to find other means with which to pay off the judgment on your student loans or move out and locate other lenders that will accept you in and present you a loan for a refinance.  Should the second scenario hold true, you will obtain the money for a mortgage refinance loan but you will have to pay your debt off the amount of money you get.

Will Your Home Be Seized?

Consider it or not, many lenders are not interested in seizing your house.  If they put a lien on your property because of the judgment on your student loan debt, they may need to pay a good amount of money just to seize your property.

If it gets sold, the lender might not always generate a satisfactory return on their investment.  Homes that get seized because of a judgment usually don’t sell at market rate, which implies that your creditor will not profit a large amount out of it.  This is why many lenders are not actually attracted in confiscating your property simply to enforce a judgment on a debt.

Besides, a lien doesn’t necessarily mandate you to sell your home – you are not obligated to do so.  On the contrary, should you voluntarily sell the home or in this instance, refinance it, you will have to pay your debt to your lender out of the payment you received as a result of the business transaction.

Second of all, confiscation of house is not something that most lenders will act since it is, quite simply, bad public image.  They mean to enforce their right to collect but at the same time, they do not desire to be seen in a bad light.  If you’re yet uncertain about the whole thing, your attorney can shed light on certain things, particularly concerning laws in your state.

What You Should Do

First, it’s important that you get a lawyer about your circumstances.  They can help guide you on what you can do regarding your loan and give you info on the procedures your lender could take should they decide to implement your judgment.  This should help you defend your property and whatever salary you might be getting at this point.

Second, you might need to talk about the steps you have to undertake concerning your application for a mortgage refinance.  Your objective here is to negotiate as best as you can in fair terms – the kind that will help you keep your home and set you back on your feet yet again.

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