Mortgage interest rates have become very low in the previous year, which encouraged many people to decide on mortgage refinancing. It is completely normal that still some people are feeling overwhelmed going through the process of replacing their current home loan.
The most common question that people are currently asking around is whether they can lower mortgage interest rates without refinancing? Since this is a common question of every borrower, we decided to put an end to that dilemma and tell you everything you should know about this topic.
Even though options can be very limited, you should stay positive, because the answer is yes, you can lower your mortgage interest rate without refinancing! In case you are currently facing financial problems, you may be able to qualify for taking advantage of the mortgage rate reduction. Basically, in most cases, people need to cut their mortgage costs or find a way to work toward getting financial approval.
However, there is one more road that you can take and that is finding the best possible mortgage rates whether you are deciding to buy a new house or conducting a refinancing process. This site can find you the lowest mortgage rates from which you can effectively benefit and save yourself from a burden.
So, let’s find out more about whether or not can You lower the mortgage interest rate without refinancing?
The mortgage interest rate you are paying generally plays a crucial role in the process of determining how affordable your loan is. Therefore, the easiest way to trade a higher rate for a lower rate is through mortgage refinance. However, we have good news since there is one way that you can choose which will guarantee you getting a lower mortgage interest rate without the need for refinancing. More precisely, we are talking about a loan modification that comes with several benefits that you can find reasonable.
A mortgage modification will help you change the original terms of your home loan in the period when you are handling financial problems. Your lent can decide to adjust your loan in different ways, so you two should see which option could be the best possible for your situation and which one you can afford. In general, there is an option of extending the loan term, the option of reducing the principal balance, and the option of simply lowering the mortgage rate.
Getting a loan modification when you are a borrower can be a challenging task. In general, you need to be behind on your mortgage payments or anticipate that you are going to miss your mortgage payments.
Everyone who is deciding to take this step of mortgage modification should know that there are some potential risks that lead to negative results. You will need to prove financial problems and go late on the mortgage payment, which can lead to ruining your credit. For instance, falling just a month behind on your mortgage payments can drop your credit score by even 110 points.
Why do mortgage rates matter?
No one actually understands the importance of the mortgage rates, so we decided to provide you with an explanation of how things are functioning, so you can conclude on your own, how mortgage rates can make such a huge difference. Mortgage rates are generally referring to the cost of borrowing money, so a person can be able to buy a house. These rates are presented as a percentage of the overall loan amount. However, the thing is that mortgage rates have a crucial impact on the property loan’s affordability.
For instance, if a person is obligated with 3% of the interest rate on a period of 30 years for a $200,000 home, and he decides to make a 20$ down payment which takes out the $40,000, he will be left with a principal and interest portion of the $675 monthly payment. In case that person decides to increase the same loan to 4% of the interest rate, his estimated principal and interest payment will be increased to $764. As you see, a monthly difference is going to be nearly $90, which will reflect more than a $32,000 difference in interest over the life of the loan. This is why mortgage rates matter a lot in a long run!
How the mortgage rate is defined?
There are multiple factors that play a role in determining the mortgage rates you have been offered with. Below, you will find all of them, so you can have a clear picture of why your mortgage rate comes with a specific percentage.
Primarily, the credit score of the person is looking and when the score is higher, the mortgage rate will be lower. The next factor refers to the down payment amount. This means that the larger the down payment is, the lower the mortgage rate will be. Another important factor that is worth mentioning present the mortgage amount, and as larger it is, the person will be qualified for lower interest rates.
The repayment term is also significant since the person will have lower rates if he has shorter-term loans. The type of the mortgage program and the type of interest rate that a person chooses are also important for the final rate outcome. For instance, fixed-rate loans are going to have higher rates than the variable rate ones.
Finally, the home location, as well as the mortgage points, are the two last things that matter. Mortgage points are generally very important since they can provide mortgage rate reduction even though they are optional.
Alternative ways to save money on your mortgage
In case a refinancing option does not suit your financial goals, there are some other alternative methods that you can conduct in order to save money on your mortgage without refinancing.
The first alternative option you have is to recast your mortgage which will lower the monthly mortgage payment. The second one refers to the dropping of mortgage insurance. Finally, your third alternative option is to make biweekly payments by splitting your mortgage payments in half.