What is the Principal 

Reduction Alternative?

When so many people are crippled by debt as is the case in today’s economy, any kind of break from all the bills is a widely welcomed boon. If you can pay your bills on time, your creditors can pay their bills on time and everyone up the chain is happy.  If you’ve gone through all the channels and reduced your interest in every way imaginable, there are still ways to cut down on the amount you owe every month. The Principal Reduction Alternative, or PRA, protects lenders while allowing borrowers to get out from under bad loans.

Let’s face it; lots of homes today are worth less than they were five, ten, or even fifteen years ago. Plummeting property values mean people are stuck with their high-priced mortgages when their homes are worthless and all the goods around them, from food to gasoline, cost more.

This means people literally have less money to pay the exorbitant rates for their properties which are losing value even as they hand over the meaty payments every month. It’s a kind of maddening situation, really.

By reducing the principal, or the amount borrowed, the government effectively reduces the mortgage payments for a homeowner because the mortgage is now for a lesser amount of money.

This helps the lenders, because they come closer to making the black on money borrowed to you and it helps you because you owe less money on your house which is worth less; not exactly an unfair arrangement considering how the government bailed out so many large corporations only a few years ago. Programs like the PRA are kind of like our bailout.