As a homeowner, it can be petrifying to go through this pandemic without the stability of knowing that you have continuous income coming into your life. Covid-19 has swept the planet, causing literal disaster in its wake. Many non-essential businesses are shutting down, and even essential companies are cutting back on their work force. Because of this, many homeowners have lost their jobs and are essentially waiting for unemployment to kick in to save them. For some, even their unemployment insurance isn’t enough to compensate a hefty monthly mortgage payment. This is when you may want to consider that there are certain things to know about refinancing a mortgage.
What Is Mortgage Refinancing?
Refinancing essentially means that you’ll take out a new mortgage to replace the old one. The benefit of this is that you’re able to lengthen the amount of time that you have to pay the mortgage, thus lowering your monthly payments. For example, if you have 10 years left on your mortgage right now and are finding the payments to be too difficult to afford currently, refinancing will provide you with a 20 to 30-year mortgage that has a significantly lower monthly payment. Likewise, many people benefit from refinancing because it allows them to get a better interest rate, they are able to find a rate that is fixed rather than variable, or even take cash out to cover bills.
Is It Smart to Refinance Because of the Pandemic?
The coronavirus pandemic is still incredibly new and is one of the most historic disasters that the world has ever faced. You can’t go to the store without wearing a mask and gloves, and you may have lost your job because you were not considered essential. While many people may be able to work from home, certain occupations do not offer this ability. This may leave you or your spouse without a job, and the loss of an income can have a profound impact on your finances. Yes, you may qualify for unemployment, but it could take weeks to see any money coming in. It’s a smart idea to consider refinancing your mortgage if you’re beginning to find that it’s too much of a financial burden to keep up with the payments in the amount that they currently cost.
Problems Homeowners are Facing Due to the Virus
As the virus continues to spread and more laws and restrictions go into place, homeowners are beginning to experience the aftermath of its effects. You or a spouse might have lost your job, cutting out a significant amount of money from your income each month. You or a loved one might currently be sick with Covid-19, the disease caused by the novel coronavirus. You might be trapped in your home and unable to leave because of being quarantined. For others, they might have spent a significant amount of money on bulk buying supplies and food, and you now have nothing left to pay the mortgage.
What You Can Expect During the Process
Refinancing is a quick and easy process that homeowners can take advantage of when needed. You simply apply for a new mortgage with a lender and can be approved in a short period of time. You’ll be given your new rate before approval so that you know how much you’ll be able to save after signing up. Lowering those monthly payments can help a lot when it comes to your already-suffering financial situation.