From the course: Economics for Everyone: Housing Markets in Crisis

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Planning ahead

Planning ahead

From the course: Economics for Everyone: Housing Markets in Crisis

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Planning ahead

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- If you're worried about a housing crisis, losing your job, or the economy, and that could impact your ability to make your monthly mortgage payments, the best thing you can do, if you have a lot of lead time, is to refinance your mortgage. One of the benefits is if the economy has slowed or the job market's weak is interest rates might be lower than when you first got the mortgage for the house. It means your interest payments will go down. The second thing is, is if you've made a number of payments and you've contributed to the principal of the mortgage, your monthly payment might also go down because you're refinancing a smaller portion of the principal that was previously outstanding. In other words, you'll be paying less, even if the clock starts over on say a 30-year mortgage. And if you're worried about crisis and losing your job, the most important thing isn't necessarily worrying about how long it takes to pay off your…

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