Why you should refinance your mortgage instead of waiting for forbearance and foreclosure extensions

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Do you measure the options between mortgage refinancing and mortgage repayment? Here’s what you need to know about why refinancing can ultimately be a better collateral. (iStock)

Biden administration recently announced takes measures to extend the federal moratorium on relocation, as well maintaining patience currently available for home loans. The move is an effort to help both homeowners and tenants who have been negatively affected by the pandemic and are struggling to keep up with their monthly payments.

However, if you want to save on mortgage payments or raise capital in your home, waiting for these extensions may not be the best move. Instead, eventually, refinancing a mortgage may make more sense. With that in mind, we’ve listed a few things homeowners need to know before weighing these two options.

If you’re ready to explore mortgage refinancing options, visit Credible to compare rates and mortgage lenders.

Refinancing can lead to long-term savings

If you look closely at mortgage refinancing and mortgage repayment, you will see that one means long-term and the other means short-term relief. If you choose to waive your mortgage, this will temporarily suspend your payment. However, at the end of the tolerance, you will have to go back to the existing mortgage terms.

On the other hand, when you refinance, you constantly change the terms of the loan by replacing them with new ones. This means that if you can save money by lowering the interest rate, you can enjoy a lower payment over the life of a refinanced mortgage.

When you’re ready to learn how much your monthly payment can change, use an online mortgage loan calculation calculator to help you determine what your new monthly payment might be like with today’s low financial rates.

Are you refinancing to save MONEY? HOW MANY OF YOU ARE IN THIS

Refinancing allows you to take advantage of today’s low mortgage rates

There is no question that today’s mortgage rates have fallen to historic lows. The average interest rate According to Freddie Mac, 30-year mortgages are currently only 2.98 percent. If you can take advantage of these refinancing rates, you can definitely save on mortgage interest. However, if your debt is tolerable, you can’t do it.

Unfortunately, once the tolerance is over, there will usually be a waiting period for you to take steps to refinance your existing loan. Experian says it should at least be done three mortgage payments in a row before refinancing a traditional loan that is patient. However, if you have a mortgage secured by the state, such as an FHA loan or a VA loan, the expectation may be different. In the latter case, you may want to call a mortgage lender to discuss your options.

If refinancing makes sense to you, visit Credible to get pre-determined rates in minutes without negatively impacting your credit score.

Are you still reconsidering your mortgage loan? WHY YOU NEED TO ACT NOW

Refinancing can help you pay off your mortgage faster

In addition to allowing you to take advantage of record-low refi rates, refinancing can actually help you repay your home loan. Simply put, when it comes to financing, you have the option to switch from a 30-year mortgage to a 15-year mortgage, which will help you achieve your goal of paying off your mortgage faster.

However, with patience, even if your mortgage payments are temporarily suspended, you won’t miss them altogether. Instead, any payments you make on your current mortgage loan will usually be added to the end of your loan, which means your loan term will be longer than you planned.

5 ways to repay a mortgage loan early

Bottom line

At the end of the day, paying off a mortgage debt should be an option to help people in financial hardship. If you have lost your job due to a pandemic and are unable to make full mortgage payments, tolerance may be a good choice. However, if money is tight but you are still able to repay your current mortgage, you may want to consider refinancing instead. Refinancing your mortgage can bring more benefits and ultimately serve you better in the long run.

Visit confidently and get in touch with experienced mortgage lenders who will answer your refinancing questions.

Have a question about finances, but don’t know who to turn to? Send an email to a trusted money specialist moneyexpert@credible.com and our question can be answered by our trusted Money Expert column.

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