Mortgage Interest Rates Rise, Paychecks Don't

[Aug 10, 2009.]

 

Homeowners facing pay cuts or unemployment encounter financial problems as their income decreases or disappears while mortgage payments remain the same. As pay cuts and unemployment looms, homeowners are looking for ways to reduce debt. Although mortgage interest rates are rising, they are still low enough to provide attractive opportunities for homeowners who wish to lower their mortgage payments by refinancing. Check current mortgage rates and estimate savings using free online mortgage calculator tools.

Paying Mortgage Loans by Reducing Expenses

You've probably heard about giving up lattes to save money, but you can also raise cash to pay down bills and meet living expenses by cutting your spending in other areas. Taking a good (and honest) look at monthly expenditures can reveal ways to cut back. Trim your cable subscription and cell phone service to eliminate unnecessary features. Mow your lawn yourself, or have your kids do it instead of paying a lawn service. Give up the high priced salon in favor of moderately priced haircuts, and take your lunch to work instead of buying lunch every day. Making small changes generates extra cash for reducing debt.

Mortgage Rates: Going Up While Pay is Coming Down

Many homeowners are facing pay cuts resulting from reduced work hours or finding new jobs that pay less than their former positions. The good news is that mortgage interest rates remain low enough to help reduce monthly payment amounts for those who can qualify for a refinance; you can get the latest information on refinancing here. Don't be discouraged by higher mortgage interest rates, especially if your existing mortgage has a high interest rate, is adjustable, or has features that make it more difficult to pay off.

Consumer Debt Interest Rates Can Threaten Financial Stability

If you're a homeowner carrying a significant amount of consumer debt, seeking help through a credit counseling agency or financial advisor may help in reducing debt and making affordable repayment arrangements. It is never wise to forgo making  mortgage payments in favor of paying other debt. Mortgage payments are typically your largest monthly expense, and are difficult to bring current once you've fallen behind. Today's mortgage rates may allow for refinancing for consolidating debt, or opening a home equity line of credit (HELOC) for repaying high cost consumer debt. You can find more information on home equity loans here.

Mortgage Rates Affected by Credit and Home Equity

Mortgage interest rates available to you can depend on your credit scores and how much home equity and other assets you "bring to the table." Checking your credit scores and reducing debt can help you gain the best advantage when shopping and comparing mortgage interest rates and loan options.

 

About Author:

Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.