Bankruptcy Is a Better Way to Take Advantage of Falling Mortgage Rates

Mortgage rates are falling again. Home values are ever so slowly edging higher. A growing number of buyers are trying (some successfully, some not) to get into the market.

The market is changing and homeowners stand to take advantage - but only if they act fast.

On average, the rate for a 30-year home loan is just over 5 percent (the record set this spring is 4.78 percent). So how did rates get so low? Earlier this year, the Federal Reserve began purchasing more than $1 trillion in mortgage-backed securities, driving interest rates down in the process. But here's the catch: the money is expected to run out by the end of the year. Rates will not remain this low forever.

Mortgage rates may rise and fall - debt, on the other hand, will only continue to rise unless you do something about it. It won't matter if you get a break on your home loan, if you get a raise at work, if you receive an inheritance - your debts will eat up your windfall eventually. If you want to take full advantage of today's rates, it's time to free yourself from the shackles of your debt.

To do so, you're going to have to stop spending more than you earn - the No. 1 reason folks end up in debt. The best way to do so is to develop a budget. Analyze your spending for a certain period of time - say, a month, six months or a year - and get a feel for where you can make cuts. Start with the things you don't need. Can you live without cable or Netflix for a while? Can you eliminate that gym membership you never use? Give yourself your own manicures instead of paying for them twice a month?

Next, look at your necessities and see if you can lower costs there. Yes, you'll still need groceries - but can you substitute some generic brands for name brands? Can you switch to generic prescriptions, which are often just a fraction of the cost?

Of course, budgeting takes work - and if you're, say, $20,000 in the hole, it might be more work than you can handle alone. That's why the government has given you another option - bankruptcy. It's the only debt relief method that's your right as a U.S. citizen - heck, it's even in the Constitution. And it's the only debt relief method guaranteed to work.

When you file for bankruptcy, your home and other assets will be protected from creditors under the automatic stay while you pay down debts under an affordable plan - or have them discharged completely. The type of bankruptcy plan you'll use depends on your individual financial situation. But you don't have to be a pro to figure it out - that's where we come in. Sign up for a free one-on-one debt analysis with one of our Atlanta bankruptcy attorneys and we'll get you started down the path to financial independence.

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