| Individuals in Credit Crisis Turning to Credit Piggybacking to Avoid ...
SAN DIEGO, Oct. 24 /PRNewswire/ -- Individuals with adjustable mortgages whose payments have escalated beyond their means and whose credit scores are too low to refinance are now finding a creative way to keep from losing their homes to foreclosure. Commonly referred to as credit piggybacking, the method has been used since credit cards were created and has been in practice on a large scale for the past year. According to Ted Stearns, owner of TradeLine Solutions, Inc., a San Diego company offering the service, the practice enables individuals to improve their credit scores approximately 200 points within 30 days. The company offering the service maintains a portfolio of trade lines, or credit accounts that have perfect payment histories. The accounts can never have a late payment for 10 years.
Negotiation, communication can forestall foreclosures
Joseph Ripplinger is a man on the verge of losing his house. A semi-retired handyman at 66, Ripplinger has turned several times to the equity in his stucco bungalow in south Minneapolis to pay medical and credit-card bills. He and his wife, Marlys, a newspaper carrier and part-time nursery clerk, bought the house in 1975 for $24,900 and raised their four children there. But it was the refinance he did last December that got him in trouble. Within days of signing the papers, Ripplinger began to realize he couldn't afford the terms of the $186,500 loan. They include an adjustable-rate mortgage (ARM) that -- as near as he can understand -- started at 1.75 percent and climbed to 8.625 percent by last month. He can't afford to refinance again. A prepayment penalty likely would cost him $6,000.
Busting money myths
The only way to determine whether a fund suits your ethical standpoint is to ask about its strategy. Will it invest in mining companies or commercial logging? In tobacco or arms companies? Refinancing Many people refinance their credit-card debts, personal loans and other expensive, unsecured debt on to their mortgage, believing it makes sense to wrap it all up in a single, lower-rate loan. This can be an expensive mistake if you don't keep finances under tight control. The problem is that although you may be able to halve your interest rate by switching your credit-card debts to your mortgage, you're likely to be lengthening the time it takes to pay the balance off -- and that will cost thousands extra. For example, Aussie Home Loans says a $10,000 credit-card balance switched to a mortgage at 8.57 per cent would increase mortgage payments by $81 a month.
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