Guest Post by Betsy Falwell
Irrespective of the situation – whether you’ve lost your job, welcomed a new baby, or are preparing for your wedding, lifestyle adjustments provide an excellent avenue to review your mortgage. By doing this, you can effectively lessen your expenses and increase your savings.
Job Loss or Major Illness
Losing a job or experiencing a serious health issue that puts you out of work for some time can be unsettling, raising concerns about making ends meet. Thankfully, there are strategies to reconfigure your mortgage that can help alleviate the situation.
You might want to consider refinancing as your initial action. Utilizing a mortgage calculator can help to ascertain the potential savings if you refinance to a lower interest rate loan. Given that mortgage rates are at an almost all-time low, now is an opportune time for this. Depending on your current interest rate, refinancing could save you a significant amount on your monthly payments.
In case the savings aren’t sufficient, the next recourse could be to seek a forbearance. This allows for a temporary pause on your mortgage payments, typically between six and twelve months, until your financial predicament improves. It’s important to know that most lenders offer forbearance only to borrowers who can demonstrate that their financial hardship is temporary, typically lasting for six months or less.
Wedding Ahead
If you’re getting married soon, it’s the perfect occasion to evaluate your mortgage with a home loan calculator. Marriage not only unites two individuals but also their financial resources. This could mean qualifying for a higher loan amount, thanks to an additional income. A partner with a good credit score could also help qualify for a lower interest rate.
While it could seem appealing to leverage your property to cover wedding expenses, it’s advisable to resist this urge. Remember, your home is a long-term investment, while a wedding is a one-day affair. Withdrawals from your home’s equity would lead to increased mortgage payments, owing to a higher principal on the loan.
New Addition to the Family
Welcoming a new family member should prompt you to evaluate all aspects of your life, with your mortgage being no exception. Even though the U.S. Government does not provide paid maternity leave, the Family Medical Leave Act (FMLA) assures new parents up to 12 weeks of unpaid leave. During this period, one potential option to cover expenses could be refinancing your mortgage to a lower rate.
However, an important consideration should be that childbirth might not be the best time to make significant changes to your mortgage situation. It’s worth keeping in mind that we refinanced shortly after the birth of our first child, only to realize that our once spacious home wasn’t accommodating our growing family. The refinancing had essentially committed us to our home for the foreseeable future.
