Homeowners May Be Forced To Refinance As Payments Increase
A new GuideToLenders.com poll indicates that homeowners' most common reason for mortgage refinancing is to lower their monthly payments--not necessarily to lower their mortgage interest rates. Today, a successful lender or broker must provide in-depth, reliable payment information beyond simple mortgage rate quotes, or homeowners will refinance elsewhere.
(PRWEB) November 6, 2006 -- A new poll of 2,456 homeowners by the site GuideToLenders.com revealed that 33 percent of those who were looking to refinance their home in August, September, or October 2006 did so to reduce their monthly payments. This percentage is nearly double the 17 percent of respondents who wanted to simply lower their mortgage interest rates. Given that the GuideToLenders.com poll data shows that consumers have specific reasons for refinancing, they are urged to shop for professional lenders who can provide the detailed advice they need to meet their financial goals.
Borrowers with once-attractive adjustable-rate mortgages who have not yet refinanced or sold their homes, have found themselves increasingly strapped for cash due to fluctuating payments once their low initial interest rates expired.
"People with fixed-rate mortgages know what their monthly housing bill will be. But for many people with adjustable-rate loans, opening their monthly mortgage statement may be like playing Russian roulette with interest rates. And as their monthly payment edges up, many of these people may find themselves having a difficult time paying their bills," says Francine L. Huff, author of "The 25-Day Financial Makeover: A Practical Guide for Women."
Ideally, no more than 28 percent of a family's gross monthly income should be spent on housing costs, yet according to the U.S. Census almost 17,500,000 American households spend 30 percent or more on housing expenses. A majority of these homeowners, 13,012,187, spend 35 percent or more. Refinancing to lower the payment amount can help a homeowner keep these expenses in line.
A Federal Reserve bulletin recognizes that for many homeowners, a principal reason for refinancing "is to raise funds by liquefying some of the equity in their home." However, it also notes the scenario in which many GuideToLenders.com visitors find themselves. "In many cases, refinancing results in a lower interest rate and lower monthly mortgage payments, allowing homeowners to spend or save that portion of their incomes no longer dedicated to servicing mortgages." To estimate the possible reduction in mortgage payments, three factors that most commonly lead to changes in mortgage payments should be examined: a change in interest, a change in loan maturity, and a change in outstanding balance.
GuideToLenders.com is a consumer resource featuring guides on how to find the right lender or broker who can provide options to best suit consumers' needs. The site has a variety of free tools and tips and provides an easy way to find multiple lenders to help consumers with their lending needs. Products offered by the lenders/brokers include new home financing, refinancing, home equity line of credit, and debt consolidation loans. To find out more, visit http://www.GuideToLenders.com.
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