Foreclosure Prevention For Homeowners–Is Home Loan Refinancing For A Lower Rate Still Helpful?

Concerns over foreclosures in the new year have many predicting that more homeowners may lose their home than in 2010, which has led to many calling for more foreclosure prevention efforts to be made on the part of servicers, but there are also questions being raised as to whether home loan refinancing for a lower mortgage rate is still available or beneficial for homeowners who may be struggling financially. In 2010, home loan modification efforts by many financial institutions provided foreclosure prevention assistance to homeowners, but low home loan rates also allowed for homeowners to refinance their home and acquire a more affordable monthly mortgage payment.

Again, predictions about 2011 foreclosures have many feeling that there are going to be more homeowners who see the loss of their home as a result of various economic factors, most notably homeowners suffering from unemployment and underwater mortgages. While there are concerns over the fact that the home loan modification effort from the Making Home Affordable Program has begun to slow in some ways, meaning that the number of homeowners receiving permanent modifications was fewer than the number of homeowners who were facing foreclosure, but in-house modification plans from servicers have seen more success and are hoped to offer alternative routes which homeowners may use if they face the loss of their home through foreclosure.

Yet, there have also been predictions that interest rates on home loans may see increases in 2011, which could hinder the opportunity for many to refinance for a lower monthly mortgage payment. There have been reports though that rates have remained relatively low and could offer some homeowners the option of either refinancing for a longer-term mortgage, which could lower monthly mortgage payments, or shorten their mortgage term which may allow them to erase their mortgage debt faster and at lower overall cost.

Obviously, homeowners who are struggling in their financial life may not have this refinancing opportunity available as there are still costs which must be considered even when refinancing for a lower rate and monthly mortgage payment. Closing costs or the simple fact that a homeowner will not receive a drop in their interest in an amount which is significant to their goal of acquiring a more affordable home loan payment are some of the hindrances that homeowners may face when they are considering refinancing.

While foreclosure prevention may be on the minds of more homeowners in the new year, there are still options that can allow for more affordability on a homeowner’s mortgage payment, as modifications and refinancing opportunities do still offer help in some cases, but extension programs which may be helpful to homeowners who are unemployed are also hoped to bring about more affordable mortgage payment costs or at lease allow homeowners the foreclosure prevention aid they need until they can find themselves a more financially stable foundation and resume meeting their mortgage payment.