Lowering Home Loan Mortgage Payments–Are Homeowners Finding Debt Relief Through Refinancing Options?

Homeowners looking to lower their home loan mortgage payments have options from various servicers, but there are also traditional ways, like home loan refinancing, that may be helpful for certain individuals who are attempting to either lower their monthly mortgage payment or reduce the overall costs that they will have to meet as they erase their home loan debt. However, homeowners who are looking for lower home loan payments and feel that refinancing will be optimal need to take into account certain aspects of this particular form of mortgage debt reduction as there are, again, different options that a homeowner may choose within this particular opportunity.

According to a report from the Mortgage Bankers Association homeowners increased their mortgage application activity for the week ending April 29, 2011, and this was mainly due to refinancing options that homeowners used as a result of more affordable home loan rates. Obviously, homeowners who are in a position to take advantage of low interest rates are usually those that best qualify for refinancing to either lower their mortgage payment or overall home loan costs, so if homeowners are attempting to find more affordability in their home loan, this is one of the first aspects that advisers often suggest that a homeowner consider.

Understandably, some homeowners may be able to get a lower home loan rate if they refinance, but this can be negated by closing costs that may come with refinancing, so homeowners need to factor this into their considerations as to whether refinancing is in their best interest. Some homeowners may have to meet high closing costs and the savings they may gain from refinancing will be either minimal, so saving money by avoiding refinancing altogether can be more beneficial for homeowners in this particular position.

However, if homeowners do find that they can afford the costs of refinancing and a great reduction that they may receive will be one that is quite substantial in relation to making their home loan payment more affordable, homeowners may fall into certain categories when it comes to the options they choose when refinancing. Last year many homeowners either refinanced to take advantage of record low mortgage interest rates in the hopes of either refinancing to a longer-term fixed-rate mortgage in order to get a lower monthly mortgage payment, while others may have refinanced to a shorter fixed-rate mortgage as a way to save on the overall cost they pay on their home loan. Obviously, any homeowner who has a longer mortgage term, like a 30-year fixed-rate mortgage, will pay more in relation to interest over the lifetime of their loan than someone who has a 15-year fixed rate mortgage despite the fact that the homeowner with the longer mortgage term may have lower payments.

While there are homeowners who are seeking a home loan modification as a way to find more affordability on their mortgage, these individuals are usually in a bad financial position as a result of unemployment or may be unable to take advantage of traditional refinancing options due to negative equity. Yet, homeowners do still have the opportunity to refinance, if they are in a financial position to benefit from doing so, but again, financial advisers stress that homeowners research how refinancing will impact their personal financial life before proceeding, as homeowners may find themselves in a worse position down the road if careful forethought is not given to refinancing.