Homeowners who are using refinancing as a way to lower their mortgage payments or simply find a more affordable way to get out of debt sooner have focused on specific types of loans as of late, according to recent reports, which indicate that homeowners who are looking to refinance and take advantage of low rates that are currently being seen may opt for either a 30-year fixed rate loan or a 15-year fixed rate refinance option, as these particular types of loans were used by the majority of homeowners who refinanced in August according to data from the Mortgage Bankers Association.
Yet, homeowners who are interested in refinancing have varied due to the fact that we have seen increases and decreases sporadically over the past weeks and months when it comes to homeowners who are turning to refinancing as a way to find more affordability on their home. There has been a great deal of speculation as to why more new home loans and refinancing options are not being used due to the fact that home prices are quite low, which is a draw for new homebuyers, and rates on home loans are also at record lows, which is going to be beneficial in many cases for both new homebuyers and current homeowners.
However, some homeowners may be hesitant to refinance or simply in a position where they can’t refinance due to negative equity or because they may be in a position where they cannot qualify for these incredibly low rates. Obviously, income constraints and even financial hardships have led some homeowners to fall into a situation where their credit score may have suffered or they cannot meet closing costs that will come with refinancing or origination fees on new homes. Understandably, this has been frustrating due to the fact that rates are at lows that some homeowners have never seen before but this has not always been a situation that some homeowners can take advantage of and used to find more affordable payments or overall lower costs.
While there are some opportunities that are on the horizon that may help homeowners in a negative equity situation refinance, homeowners in a traditional situation, meaning they have equity in their home and may qualify for lower rates, are still hesitant to refinance in some instances simply because they, again, feel they either cannot afford the costs, may not benefit from doing so, or they may simply be happy with their rate and payments as they happen to be.
Yet, homeowners who do feel that they can benefit from refinancing are still urged to make sure they do their homework as a financial professionals often point out that factors like how much longer a homeowner has owned their home loan, their credit score, and how much fees and refinance costs would be for a particular homeowner could offset any advantages from refinancing and, despite some homeowners getting a lower rate or even a shorter term, these upfront costs or the lack of savings may make refinancing unhelpful.