Lowering home loan payments through refinancing options were quite popular in 2010 when mortgage interest rates were at near record lows, and even as rates continue to edge higher, there are still some advisors who feel that homeowners may have the option to refinance their home loan and if new changes are to take effect, consumers may want to look at their options sooner rather than later due to the fact that it could be more costly to either buy a home or refinance in the near future. It’s understandable that homeowners are still looking for ways to find more affordability in their mortgage payment due to the fact that strains in the personal lives of many are still present as factors like negative equity or job loss are still impacting men and women across the nation.
However, many wonder whether homeowners should consider refinancing even if a lower mortgage rate and payment are available, as there are obviously drawbacks that can be present in the life of a homeowner when they consider refinancing their mortgage. Many men and women who were simply looking for lower payments on their home loan may have been able to refinance their current mortgage, receive a lower interest rate as a result, and see a reduction in their home loan payment obligation each month, but there were also options to refinance to shorter mortgage terms, which led to lower overall costs for some.
According to an article on Foxbusiness.com, there are different strategies that can help homeowners find more of affordability in their home loan and erase their mortgage debt faster, but obviously, depending on a homeowner’s position and their wants or needs when it comes to their mortgage payment, some methods are better than others. As an example, homeowners may be able to simply refinance for a lower rate, they can refinance to a shorter mortgage term or some homeowners have even opted to make biweekly payments on their mortgage.
Yet, a report on Bankrate.com made mention of the fact that new mortgage standards that have been proposed by regulators could lead to problems for consumers as, when it comes to refinancing for example, homeowners “would have to have at least 25 percent equity if you’re refinancing,” and there are also indications that simply buying a new home could be more expensive thanks to upfront costs as well.
When it comes to lowering a home loan payment, though, homeowners must simply look at their financial position and what they want from refinancing before making a decision, as again, different options for refinancing will ultimately lead to different effects on a home loan payment. As an example, homeowners who may want a more affordable monthly payment on their mortgage may be able to refinance for a longer mortgage term or, if they have a 30-year fixed-rate mortgage has an example, simply refinance for a lower rate and this can lead to a lower monthly payment as well. While some homeowners have also refinanced to a shorter mortgage term, like a 15-year mortgage or a 20-year mortgage, and may have gotten a lower rate that also brought down their monthly mortgage payment, usually shortening a mortgage term will only lead to overall lower cost rather than a monthly payment reduction. Also, homeowners must simply be in a position to afford the costs that come with refinancing, have a good credit score, and be in a position to where refinancing will bring more affordability in an amount that will be worth the costs and will not be offset by any fees or only a small reduction in a homeowner’s rate or payment.