What are Your Options Besides Refinancing?

What are Your Options Besides Refinancing?

Is your mortgage payment becoming more and more difficult to pay each month? Is refinancing your home to get a lower payment simply out of the question? If so, there are other options available to you.

Are you having problems making your mortgage payments but refinancing your mortgage loan just isn’t an option for you? If so, there are other options available if you are willing to do some legwork in order to make it easier to pay your monthly house payment. Here are three such options.

1.     Ask your lender if you can recast the amortization of your mortgage. For homeowners who have had their mortgage for at least five years and your loan payments have been on time every month, you may qualify to have your mortgage recast. A recast means that your mortgage loan is recalculated so that you can spread out the amortizing payments over the period of the loan.  This can be especially effective if have paid down the mortgage principal at some point. It is also possible to recast a mortgage so that the principal amortizes at a slower rate at the beginning of the loan (lowering payments in the near years since they are primarily interest payments).  In many cases, therefore, a recast will lower your monthly mortgage payment quite a bit to make it easier on your budget. However, since a recast delays paying off principal, it extends the loan and means that you will be paying more in the long run over the term of your loan.

2.     Ask for a lower interest rate. Mortgage lenders are often willing to work with you when you run into trouble making your payments. One thing that your lender may be willing to do is to lower your mortgage rates. If you have a good record of making your payments on time, you will be more likely to qualify for an interest rate reduction so be sure to send those payments when they are due.  Before you ask for a lower rate, you should be sure to check the current interest rates in your area.

3.     Ask about modifying your mortgage loan to an interest-only mortgage for a couple years. By turning your current traditional mortgage into an interest-only mortgage, you can lower your monthly payment significantly. However, this may be the most difficult option as many banks are not as willing to do this as they are the other options.

These are just a few options available to today’s troubled homeowners. But just because they are options does not mean that your mortgage lender will be willing to do it. If you have a history of late payments or other problems with your mortgage payments, your bank will be less willing to work with you. That’s why it is so important to contact your lender as soon as you start having financial problems. Never ignore the problem. The sooner you call your lender about your financial problems, the more options you have when it comes to working out an agreement.

See mortgage refinance rates where you live here.

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