Homeowners have been able to use refinancing, in various forms, as a way to take advantage of low mortgage interest rates and either lower their monthly mortgage payment, lower their overall home costs, or do a combination of both. While not every homeowner may be able to take advantage of refinancing opportunities, present conditions have created optimal conditions for certain homeowners looking to lower their mortgage costs.
Some individuals have turned to cash-in refinancing as a way to lower their overall mortgage costs and reduce the length of time they will be repaying on their home loan. Homeowners who have benefited from this type of refinancing have put money towards their mortgage principal when they refinanced, typically for a lower mortgage rate, and as a result were able to shorten the lifespan of their home loan and lower the total costs that they will pay.
Yet, not every homeowner has been able to put money toward their mortgage, but rather have been looking for ways to lower their monthly mortgage payment. Home loan interest rates have been quite low for homeowners who may be in a decent financial position, and as a result some have refinanced to a home loan which will afford them lower monthly mortgage payments. Typically, these home loans have been more long-term loans, like a 30-year fixed rate mortgage, and have allowed homeowners the chance to reduce their monthly mortgage obligation. However, these longer home loan plans can be more costly overall, but homeowners who fear missing mortgage payments have been willing to pay extra costs that come from interest.
While there are cases where homeowners have been able to refinance for shorter home loans, like a 15-year fixed rate mortgage, and have also gotten an interest rate low enough to where they saw a reduction in their monthly mortgage payment, most homeowners are either looking to lower their month-to-month payment or overall costs on their mortgage. Usually, these homeowners are in different financial positions, meaning one is able to put extra money towards their mortgage while the other may be struggling somewhat in their personal finances.
No matter the reason behind a homeowner’s wants to refinance, refinancing is not something that should be entered into lightly and financial advisers often suggest a homeowner speak with different mortgage lenders, look at their personal financial situation, and simply do the math to see how refinancing will affect them. Again, homeowners have benefited from low mortgage interest rates that are currently available, but this is not something that every homeowner will be able to take advantage of or afford in their current mortgage situation.