There have been homeowners who have turned to short-term mortgage options as a way to save money on the overall costs of their home loan. Refinancing plans which have allowed homeowners to either switch to a 20-year or 15-year mortgage, in many cases, have been used by numerous individuals who want to lower the overall costs they would have paid once they have erased their mortgage debt entirely.
Home loan interest rates have offered affordable options for homeowners in this area, but these refinancing plans are obviously not beneficial for everyone. While there have been rare cases where homeowners refinanced to a shorter mortgage and, as a result, they have seen a lower mortgage payment as result, in many cases homeowners who refinance for a shorter mortgage often see a higher monthly payment obligation.
Yet, homeowners who can afford the potential higher payment on a 20-year or 15-year mortgage do, in some cases, stand to pay lower costs since interest will not be able to build over such a long period of time. While there have been homeowners who have attempted to lock in a 30-year fixed mortgage simply as a way to lower their monthly payments, homeowners who have been on a stable financial ground, who have a good credit score, and equity in their home have usually benefited from these types of refinancing plans.
However, many advisers often suggest that homeowners take a look at their personal financial situation before they proceed with refinancing. Obviously, the homeowner will need to be in a financial position to afford the costs that come with refinancing, but some advisers state that a homeowner may only receive a minimal interest rate reduction or may not benefit from refinancing at all, in certain cases. For this reason, homeowners that have benefited from refinancing are those who have researched refinancing opportunities with various mortgage servicers, in order to see if they can get a lower rate on their home or if refinancing will indeed bring a lower overall cost for their situation.