Foreclosure avoidance is feasible with this equity technique, as you will see below. We all know that when faced with the prospect of foreclosure, people take drastic measure to ensure that they retain ownership of their homes. One of the most common methods is by taking out a second mortgage on their property and using a portion of the equity to help settle some of their overdue payments.
This is probably the best recourse for people who have are suffering from a short-term financial problem and are expecting to have a more stable source of money in the near future.
The problem with this method of foreclosure avoidance is that you are actually using the source of your problems –your home– to be the solution to the same problem, which can become quite problematic indeed. A better way of securing a foreclosure loan to stop the foreclosure process is to use other equity that are not related at all to your house.
Different kinds of equity you can use for foreclosure avoidance
The home is usually the biggest asset that people have and this is why most people tend to use their home equity to secure foreclosure loans. However, other equity can also be used for the purpose of foreclosure avoidance such as your savings account, or stocks and bonds that are in your name.
In fact, you can even use those equities that are not in your name. Of course, we are not talking about identity theft or anything illegal. Instead, you can ask someone –perhaps a friend or a private lender– to use their assets to secure your loan.
As for the interest or repayment in case of default, this is something that you will have to discuss privately among yourselves.
How to avoid foreclosure with private lender help
If you go to a private lender and ask for help in this matter, you should know that the average interest rate is currently at about 5 or 6 percent, approximately one percentage point higher than the current interest in most banks.
This is actually a very good deal, and a quite huge risk on the part of the lender. You may get it with the aim of foreclosure avoidance and solve your pressing problem.