Contact Information: Media Contact: Amy Summers 727-848-1618 ext. 202 Pitch Inc.
DALLAS, TX--(Marketwire - February 26, 2008) - In spite of mortgage rates hovering around a
5-year low, thousands of troubled homeowners believe their only choice is
to flee their home and face foreclosure. But with such inviting interest
rates why are homeowners electing to surrender their property instead of
simply refinancing?
"Many homeowners are experiencing mortgage anxiety and are really
discouraged at this point," says Carrie Kelleher, chief operating officer
of mortgage company lending.com. "Foreclosing on your home or relinquishing
your residence should not be your first choice, nor does it have to be in
this market."
Experts say as rates come down a number of lending options become available
and it is critical to find a lender who can council the homeowner through
their options. Here are some questions Kelleher says homeowners should ask
before making a decision:
1) Is there a financial advantage to refinance? In a market with reduced
interest rates like we have today, many people who have closed a mortgage
in the past five years will see an advantage of increased disposable
income. Refinancing can provide one of the key weapons needed to fend off
foreclosure: increased financial flexibility.
"The mortgage industry tosses around a number of litmus tests associated
with refinancing such as a reduction of two percentage points off a
homeowner's current loan, or minimum number of years in which they plan to
stay in their house," says Kelleher. "These are certainly factors, but one
shouldn't be swayed too much by the generic industry parameters, especially
if the primary objective is to stave off foreclosure."
2) Can refinancing make a big enough impact to avoid foreclosure? The
answer to this question must be measured against the homeowner's total
debt. Home foreclosures are rarely only about mortgage debt, but more so
about a person's ability to pay off their cumulative monthly bills.
Refinancing can increase one's disposable income and provide the
flexibility to better manage other debt. People often underestimate the
cumulative value of incremental savings gained by refinancing their home.
3) What are the available refinancing options? Don't be afraid to ask. A
lender should not only be viewed as an entity to provide refinancing loans.
A good lender can also be leveraged as a resource to advise the homeowners
about their options, explaining the pros and cons of refinancing and
informing them of the processes associated with each of their choices.
"Be on the lookout for lenders who don't have the time or patience to walk
you through your options and explain the value of refinancing," says
Kelleher. "You wouldn't spend $50 at a restaurant with poor customer
service, so why would you spend $250,000 dollars with a lending company who
is only focused on their next deal?"
The decision of foreclosing is obviously not glamorous and can have many
negative long-term implications to a homeowner's credit. For people who
fear they may be close to foreclosure, they should contact a lender and see
if refinancing might be the key to relieving some financial stress.
Learn more about lending options and check out money saving tools at:
http://www.lending.com.
Did you know? Reducing the interest rate 1 percent on a $250,000 home with
a 30-year note has the potential to save the homeowner $55,000 over the
life of the loan.