Saving the Family Home From Foreclosure
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by: marciafreeman
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Mortgage refinancing has increased over the past few months. Lower mortgage rates were generated by early 2009 Obama Administration relief efforts designed to help underwater homeowners and stabilize the housing market, made mortgage refinancing easier and provided hope to the beleaguered. Underwater borrowers can realize big benefits through mortgage refinancing.
Many of these borrowers took advantage of the recent housing market boom by taking on mortgage debt they had no ability to repay. Less scrupulous lenders encouraged this practice by offering adjustable rate loans with attractively low introductory rates that subsequently spiked out of reach. Many of these borrowers were left underwater, so to speak, when the housing market crashed, reducing home values to amounts lower than their outstanding mortgage balances. With no options left to them, millions of people simply walked away from their homes, allowing their lenders to foreclose and forever ruining their credit. Mortgage refinancing before default or foreclosure may help to turn things around for the remaining borrowers who stayed with or are on the brink of losing their homes. As of early May, 2009, the average interest rates for 15, 20, and 30 year fixed rate first mortgage loans hovered at or near 5 percent, making mortgage refinancing even more attractive.
Mortgage refinancing functions by either paying off an existing mortgage loan or combining existing first and second mortgage loans into a single first mortgage loan. Obviously, lower interest rates on a refinanced mortgage translate to lower monthly mortgage payments overall. But, mortgage refinancing is more than just lower interest rates. You can also either increase or decrease the term of your mortgage, which has a direct effect on the amount of your monthly payment. More of the monthly payment of a loan with a shorter term goes toward paying down principal as the interest rates tend to be lower. The good news is that this decreases your total interest costs. The bad news is that the monthly payment will be higher. On the flip side, longer mortgage terms reduce the monthly payment but increase total interest costs by virtue of the greater number of payments needed to pay off the loan. Either option is worth considering, depending on your needs.
Mortgage refinancing can be your road to recovery if you are facing foreclosure. For those who are not facing foreclosure, mortgage refinancing can offer an excellent source of extra monthly income and help you to build up the equity in your home faster. References Refinance - Mortgage rate -
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