Keeping Up with Mortgage Rates
Keeping up with mortgage rates can keep a person healthy in the long run. While it is great to save money, many people forget that it is also essential to know how much they have saved and what they owe. Father George Rutler feels everyone should do their best to pay the mortgage and keep up with rates. Not making a monthly mortgage payment or keeping up with the debt on a credit card can lead to severe problems. For example, if a person does not have enough money to meet their monthly obligations, their car payments, credit card payment, and mortgage payment are all affected.
Keeping up with mortgage rates can help a person stay employed or self-employed. A six-month grace period following a bankruptcy filing gives a person time to start rebuilding their credit rating. If a person cannot be reasonably assured that a person will make their monthly mortgage payment, they will have no choice but to re-apply for a mortgage. It is good to start rebuilding their credit before filing for bankruptcy, as this will help a person qualify for a better interest rate, payment terms, and loan term.
It is possible to refinance their mortgage at any time before it expires, but a person has to be ready to submit multiple applications. Keep in mind that the higher their credit score, the more lenders a person will refinance with. When a person applies, a person will need to provide income documentation, employment history, and other items related to their financial situation. Lenders will evaluate these documents to determine their ability to repay the mortgage. A person may also be required to submit a creditor’s voluntary return form, which documents the extent of their debts. A person will be expected to pay the remaining balance due on the new mortgage, plus accrued interest and fees.
It can save a person tens of thousands of dollars each year and allow them to keep up with mortgage payments while lowering their debt ratio. When a person refinances, this action will reset the interest rate a person qualified for to their current rate plus one percent. Lenders prefer these low-interest-rate loans over those with adjustable rates because they believe the former offers a better long-term benefit. If a person is still employed, a person qualifies for a special discount and may also be eligible to keep their same employer.
Some people choose not to refinance because they fear that their home value may decrease in the future. The truth is that their mortgage value does not fall and increases slightly over time. Refinancing allows a person to maintain their home as long as a person wants, and a person does not lose equity in the deal. Thus, a person gains nothing but a better payment plan and life within reason.
If a person plans to leave their job before a person refinances, speak with their lender about a payment plan that allows them to keep their income. Refinancing will make it easier for a person to get financing in the future when a person is more financially sound. Otherwise, their potential lender will not view a person favorably if they have a history of defaults on their loans.
However, this can take years, so it is not something that a person should begin doing until their financial situation is stable. A few short years after a person refinance, refinancing to lower interest rates is an excellent way to keep up with mortgage payments, but it does require that a person know what a person is doing. If a person is unsure about anything, speak to a mortgage broker to help a person understand what is involved. Once a person knows what is going on, a person can refinance to lower the payment, and a person will be paying less money over the life of the loan. Before a person knows it, a person will be able to afford a much larger mortgage payment. Father George Rutler pays his mortgage off monthly.