Obviously, the housing market has seen a mixture of homeowners who have either had difficulty making their mortgage, faced foreclosure, or homebuyers who have begun seeking out a property to purchase and current homeowners who are looking into their refinancing options. The latter group who may be turning to refinancing simply because home loan interest rates are low, for some, have in many cases turned to short-term refinancing opportunities in order to lower the overall cost of their home.
Homeowners who may be opting to refinance for short-term mortgages like a 15-year fixed mortgage or 20-year fixed mortgage are often advised to take a good look at their personal situation to make certain their finances are in order in such a way that will allow them to benefit from refinancing their home loan. Homeowners who have typically benefited from shortening their mortgage lifespan are those who have equity in their home, a good credit score, and can simply afford the costs which come from refinancing.
Also, despite the fact that there are some exceptions, shortening one’s mortgage often may lead to a higher monthly payment despite the chance to lock in a lower rate on one’s home loan. Lower interest rates on mortgage and a shorter repayment time period can be beneficial for a homeowner, in that they can save a great deal of money over time, but some homeowners may be unable to drastically lower their interest rate or even get a rate that has any significant bearing on their overall home loan costs, and there are certainly homeowners who may be unable to meet a higher monthly payment on their mortgage.
The way that many homeowners have benefited from shortening their mortgage term is simply by qualifying for a lower rate and being in a position to meet potential higher payments from month-to-month. While a shorter mortgage term will allow a homeowner to own their home outright years ahead of schedule, it is not always in a homeowner’s best financial interest to refinance in this way. Yet, homeowners who may benefit from refinancing to a shorter mortgage term are also advised by housing counselors to talk with various mortgage lenders about refinancing, so that they can get their best rate when they choose to refinance.