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Rising Mortgage Rates Lead to Concerns for Homeowners
By Karen Lawson
CMR Columnist
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Without a doubt, rising interest rates are causing concern among homeowners. If rising payments on your mortgage are giving you a headache, your lender may be able to help by refinancing your mortgage to a fixed rate, or consolidating your debts. If you are having problems making your payments, don't avoid your lender. Honest communication enables your lender to suggest short and long term options to assist you.
Long Term Solutions: Refinancing or Selling Your Home
Although mortgage rates are rising, refinancing to a fixed rate mortgage or for debt consolidation can help you balance your household budget while achieving peace of mind. Your ability to refinance depends in large part upon the present value of your home, and your income. Benefits of refinancing to a fixed rate or for debt consolidation include:
- Your principal and interest payment on a fixed rate mortgage are consistent, which helps maintain a monthly budget.
- Refinancing for debt consolidation allows you to eliminate the comparatively high interest rates charged for credit cards and consumer loans.
- In many cases, the interest paid on your refinanced home mortgage will be tax deductible, whereas interest paid on credit cards and consumer loans is not deductible.
You may need short term assistance from your lender, for instance, if you've bought a new home and your old home hasn't yet sold.
Help for the Short Term: Forbearance and Repayment Agreements
It's a fact of life that sometimes you have financial concerns. If your mortgage payments have risen, or you've bought a new home, and your old home hasn't sold, you can ask your lender for assistance. In most cases, you have sixty days before your loan is considered in default. As soon as you anticipate problems making your mortgage payment, call your lender. They may extend forbearance or accept partial payments until you can repay the entire amount or refinance. Remember, your lender would prefer to help you rather than foreclose your mortgage.
About the Author
Karen Lawson has more than fifteen years of experience in mortgage banking, including developing loan workout programs and policies for servicing defaulted mortgage loans. She holds an MA degree in English from the University of Nevada, Reno.
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