Lowering Overall Home Loan Costs Through Refinancing–Cash-In And Short-Term Mortgages Have Helped

Some homeowners have attempted to lower their overall home loan costs through traditional refinancing means, which have allowed certain individuals to refinance for a shorter mortgage term, while others may have refinanced and used a cash-in option. Understandably, with the problems in the real estate market concerning negative equity, not all homeowners may have this opportunity since refinancing will require that a homeowner be in a decent financial position, in most cases.

Yet, homeowners who have been in a financial position to do so, and have had a decent credit score and equity in their home as well, have been able to use refinancing as a way to lower their home loan costs over the long run. When a homeowner has refinanced for a shorter mortgage term, like a 15-year or 20-year mortgage, there is more often than not an increase in the homeowner’s monthly mortgage payment. However, this increase in the monthly payment will shorten the total repayment period during which a homeowner is repaying their mortgage debt.

Obviously, the shorter the mortgage life, the smaller the amount of interest a homeowner will acquire. However, some homeowners have refinanced to a longer mortgage term, like a 30 year-mortgage, in the hopes of getting a more affordable monthly mortgage payment, but have used cash-in refinancing as a way to shorten their mortgage repayment timeframe as well.

While not all homeowners may be able to apply cash towards their mortgage principal when they refinance, homeowners who have taken advantage of this opportunity have, again, been able to lower overall costs since it has cut down on the total amount of time which they will repay on their mortgage debt.

Homeowners who may be considering refinancing for a more affordable overall mortgage debt are strongly cautioned by financial advisors to take stock of their personal financial situation before proceeding. Some homeowners may not have the equity to benefit from or financial ability to meet certain costs associated with refinancing, and there are also homeowners who may pay these refinancing costs, but get little or no benefit from refinancing.