There have been reports that more homeowners are refinancing their home loan in order to lock in a lower interest rate and save money on their home loan payments. Interest rates on home loans have been incredibly low and, for homeowners in the position to take advantage, refinancing has helped make homes more affordable in a variety of ways.
Homeowners who have refinanced to obtain a lower interest rate have been able to, in many cases, get a lower monthly mortgage payment. Some homeowners have refinanced to a fixed mortgage, which has brought some of the lowest rates on mortgage interest and affordable home loan payments.
Yet, there are those who can not take advantage of refinancing due to factors like unemployment or having an underwater mortgage. Concerns over these individuals often deal with the fact that some homeowners are close to facing foreclosure while others, in an underwater mortgage situation, may simply give up on their home loan, if they can still even afford the payments.
For homeowners who are in a position to take advantage of these low mortgage rates, refinancing has either been a way to get a lower monthly mortgage payment or lower their overall home costs. While some have refinanced to popular loans like the 30-year fixed rate mortgage in order to get a lower monthly mortgage payment, others have shortened their mortgage terms. Shorter mortgage terms, like the 15-year fixed rate mortgage, have low interest rates as well, but can cost less over the entirety of one’s mortgage repayment lifetime.
Typically, homeowners that have been able to use these low mortgage rates to their advantage have been those with equity in their home, a good credit score, and those who can afford the costs that come with refinancing. While low rates are currently out there, some homeowners may not qualify or might incur such costs associated with refinancing that doing so would bring little or no benefit.