Recent data here at the end of June indicated that there was a decrease in the number of mortgage applications which were seen for the week ending June 24, but for homeowners who are currently in a position where they may be able to find more affordability on their home, rather than those who are simply looking for a new home, there are options that are still in place which may be going unused by homeowners. Last year we saw a tax credit program which prompted more homeowners to enter into the housing market, but currently there seems to be hesitation on the part of many buyers as decreases in home values may potentially be scaring off some from the housing market, but there are ways that current homeowners may be able to use conditions that are already in place to their benefit if they are in a financial position to do so.
Negative equity has been a problem for many homeowners across the nation, but there are still homeowners who are in a position where they may be able to refinance their home loan and set themselves on a course for more affordability in terms of either their monthly payments or overall home loan costs. Currently, it’s been reported that mortgage rates are around 4.5%, on 30-year home loans, but this rate drops somewhat when 20 year home loans or a 15-year fixed home loan is explored, and these rates can be incredibly helpful in terms of getting a homeowner more affordable payments on a month-to-month basis or getting out of debt sooner at a lower total cost.
While this may be common sense for some homeowners, those who are unaware of how refinancing may benefit their current mortgage situation may find that if they refinance to a longer fixed-rate mortgage, a lower monthly mortgage payment may be the result, but there are some homeowners who may pay more over the long run than if they had refinanced for a short-term mortgage like a 15-year fixed rate home loan. These short mortgage terms have helped homeowners, not only as of late but previously when mortgage rates were at record lows by allowing them to pay off their home loan sooner and incur fewer costs related to interest payments.
There have been officials who have questioned why more homeowners who are in the position to do so have not entered the housing market due to low home prices and these affordable rates but there are still options for current homeowners to take advantage of potential cost-saving options on their mortgage, particularly if financial troubles related to their mortgage payment have caused problems. While homeowners must understand that meeting closing costs when they refinance will have to be factored into their decision, their credit score and history will also affect whether they get a low rate or not, but for those who are in a good credit position and can afford the costs of refinancing these options are on the table.
What officials want homeowners to remember though, is that refinancing for a more affordable rate and, potentially, a lower mortgage payment does not guarantee that a homeowner will not face financial troubles in their life, but this is simply one way that a mortgage payment burden can be lessened for homeowners at the present time. Obviously, when unemployment may be an issue or problems like negative equity are in place, this could lead to a need for homeowners to explore alternatives for affordability through programs like the Home Affordable Modification Program, as refinancing is not always going to be in a homeowner’s best interest.