Refinancing in an uncertain housing market

When the housing market crisis hit, many homeowners saw their property values drop as the economy and job market started to plummet. After the Federal Reserve decided to stimulate the economy through a variety of programs that would also keep mortgage rates down, many homeowners flocked to their mortgage lenders to refinance their home loans and avoid foreclosure.

However, many homeowners do not realize how to best refinance during a down economy. First, it is important for consumers to understand that refinancing or modifying a home loan actually extends the term of the loan by lowering monthly payments. For example, if a homeowner has a 30-year mortgage and has been paying it for five years before he or she refinances, the modified loan will actually not be paid out until 35 years after the original acquisition of the mortgage, according to the Chicago Parent.

Some homeowners are looking for mortgage deals online, rather than going directly to their lender. Consumers are browsing mortgage quote sites as well as perusing social media networks to read peer reviews of lenders before deciding which financial institution to work with, according to Reuters. This, in turn, is putting pressure on lenders to improve their practices to build a solid reputation online, as well as offer more convenient options for customers.

"There's this growing expectation among consumers that (mortgage refinancing) should be like the other things in their life with financial services: 'I should be able to do things on my clock,'" Mark Schwanhausser, senior analyst at Javelin Strategy and Research, told the source.

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