Lower Mortgage Interest Rates: Should I Refinance or Modify my Mortgage?

If you are currently a homeowner and have a high mortgage rate that you are locked into or if you have an adjustable rate you may be interested in lowering your mortgage rate or locking into the current rate.  Recently the mortgage rates dropped down to under 5% for the first time in months.

The governments efforts to make sure new buyers and current homeowners receive low mortgage rates are not only benefiting the new buyers and homeowners seeking to purchase a new home but it is also benefiting those who are looking to modify or refinance their mortgage (although studies have shown that many people have not been choosing to modify their mortgage but rather prefer to refinance). A study which was done over the past year showed that only approximately 10,000 people modified their mortgages whereas approximately 3 million mortgages were refinanced and on average the people who refinanced their mortgages saved an average of $150 per month.

A lot of people believe that the reason mortgage modifiications are not as popular as refinancing is simply because banks have offered refinancing options to their clients for years and it is a simple process that they are used to doing.  Another reason for mortgage modifications being less popular among homeowners looking to lower their monthly payments is possibly because they are not fully aware of what modification to their mortgage is whereas, similar to the banks, they are used to the idea of refinancing.

To help you understand what mortgage modifications are and what refinancing is here is a description of both:

  • Loan Modification – The process where the terms of the mortgage is modified outside of the original terms of the mortgage agreement (contract) agreed to by the borrower and lender.  The loan may be modified to change the terms of the interest rate, loan terms, loan balances, the length of the loan or any other part of the loan agreement.
  • Loan Refinance – The process where an existing debt obligation is replaced with a new debt obligation with different terms.  You are essentially paying off an old loan with a new loan with different terms.

Refinancing or modifying your loan may be a smart thing for you to consider if you:

  • Currently have a high mortgage rate
  • Have an adjustable rate mortgage (commonly known as ARM)
  • Need extra cash
  • Want to consolidate high interst credit cards

If you would like to discuss the legal side of refinancing with a real estate attorney to make sure your best interest is being looked after contact Steven T. Decker Staten Island real estate attorney at 800.976.4904 or 718.979.4300.

Steven T. Decker is an experienced real estate lawyer, author and speaker. With over 20 years of experience, Steven represents individuals and investors in the purchase of residential and commercial real property. Steven is the author of "The Five Myths that can Ruin the Purchase of Your Home" and he is the publisher of the "New York Real Estate Law Blog". If you are buying or selling a home or commercial property in Staten Island, New York City or New Jersey contact Steven T. Decker, Esq. to discuss the services that he offers and how his legal representation will assist you.

IMPORTANT DISCLAIMER: The information contained on this website is provided for general educational purposes only, should not be relied on as legal advice and does not serve to create an attorney client relationship. In utilizing this website you acknowledge that there is no attorney client relationship between you and Steven T. Decker, Esq. and that the information contained on this site does not and cannot serve as a replacement for the competent legal advice of a licensed attorney in your state. The content of this website is subject to the Copyright of its author, Steven T. Decker, Esq.
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