February 01, 2013

A refinance can save your home from a foreclosure - Know the multiple benefits

Are you someone who is struggling to make ends meet? Most of the Americans who are going through dire financial straits are the ones who fail to make their monthly mortgage payments. Defaulting on the mortgage loan can lead to a foreclosure and therefore you have to take solid steps through which you can repay your mortgage loan debt so that you can retain your home ownership rights. Refinance is nothing but a foreclosure alternative. You take out a new loan and replace the old one with better terms and conditions so as to help you ease the process of repaying the loan. Have a look at the benefits that you may get from a refinance apart from avoiding a foreclosure.

• Grab lower rates: The interest rates on the loans are the biggest reasons behind the rise in the mortgage delinquencies. If you take out a home mortgage refinance loan, the interest rates will be much lower than what you’re now paying and this will help you save a considerable amount of money every month. The new loan will offer you better interest rates and for this, you need to shop around so that you’re able to choose the best loan in the market.

• The repayment term will be altered: The repayment term of the loan will be altered and you can easily be able to repay the loan throughout a stretched period of time. Usually, when the borrower has to repay the loan through 15 years, the monthly payments will be higher than what he might have to pay for a loan with 20 year repayment term. While taking out the new loan, if you choose one with a longer repayment term, you will be able to lower the monthly payments.

• The type of loan can be changed: The type of loan often becomes a hindrance for the borrower to repay on time. If you have taken out an ARM due to the initial low interest rates that they charge, you might wish to change the loan type to a fixed rate mortgage so that you can at least be sure about the monthly payments that you might have to make. This way you can change the loan type through a refinance and also conveniently repay the loan without having to fall back on other debt obligations.

• You can save your dollars: Most struggling homeowners have the common goal of saving money and this is possible only when you can take the required steps to refinance your home loan. As you can make timely repayments through the refinance loan, you can easily be able to save the dollars. However, there is a catch as you can only save your dollars when you choose a loan that carries interest rates that are pretty lower than what you’re presently paying.

If you’re spending sleepless nights worrying about your soaring debt burden and your mortgage loan that is already in default, check out the above mentioned benefits of refinance.

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