Home Loan Mortgage Modification May Give Way To Refinancing For 30-Year Fixed-Rate Mortgage

With mixed results from the home loan mortgage modification program, specifically homeowners with financial difficulties being denied because they aren’t in enough trouble per se, many are turning to refinancing for a 30-year fixed-rate mortgage as an alternative to modifying a loan. However, does one outweigh the other in terms of usefulness or are they both helpful in the war against foreclosures in 2010?

The home loan modification program enrolls a homeowner in a trial-period where their mortgage basically stays the same but their monthly payment is lowered to around 30% of their monthly income so that they may better afford their home loan payments.

Refinancing to a 30-year fixed-rate mortgage, on the other hand, can give the homeowner a lower interest rate, which translates to a lower payment. Also, if the homeowner is able to get a 30-year fixed-rate mortgage at a low interest rate, then these low payments are going to stay that way and the homeowner doesn’t have to worry about higher payments as with an Adjustable Rate Mortgage.

It would seem that banks would be offering the 30-year fixed-rate mortgage to more homeowners who are in trouble, while interest rates are low, if they can’t help the homeowner by way of a home loan mortgage modification.

If you have a good credit score and equity in your home but due the economic troubles of the past year you foresee trouble on the horizon you may want to check into a 30-year fixed-rate mortgage. Until the economy and job market turn around people are going to struggle to pay their mortgage, but if you can take action before things get too bad then you may be able to at least make your mortgage payments more affordable.