When life changes—like losing a job, welcoming a new baby, or preparing for a wedding—it’s a great time to rethink your mortgage. This can help you cut down on expenses and save more money.
**Job Loss or Major Illness**
Losing a job or dealing with a major health issue can be really stressful, especially when you’re worried about making ends meet. Thankfully, there are ways to tweak your mortgage to make things easier.
First, consider refinancing your mortgage. A mortgage calculator can show you how much you could save by switching to a loan with a lower interest rate. With mortgage rates being so low right now, it’s a great time to do this. Refinancing could noticeably reduce your monthly payments.
If refinancing doesn’t save you enough, you might look into forbearance. This lets you temporarily stop making mortgage payments, usually for six to twelve months, until you get back on your feet financially. Most lenders will offer forbearance if you can prove that your financial issues are temporary.
**Wedding Ahead**
Getting married is another reason to re-evaluate your mortgage using a home loan calculator. Combining finances with your partner could help you qualify for a larger loan amount, and a partner with a good credit score could get you a lower interest rate.
Though it might be tempting to use your home equity to pay for the wedding, try to resist this urge. Your home is a long-term investment, whereas the wedding is a one-day event. Using your home equity will increase your mortgage payments because you’ll owe more on the loan.
**New Addition to the Family**
When you welcome a new family member, it’s important to re-examine all aspects of your life, including your mortgage. Even though the U.S. Government doesn’t provide paid maternity leave, the Family Medical Leave Act (FMLA) gives new parents up to 12 weeks of unpaid leave. During this time, refinancing your mortgage to get a lower rate could help cover expenses.
However, be cautious about making major changes to your mortgage when you have a newborn. We found out the hard way—after refinancing soon after our first child was born, we realized our house was too small for our growing family. The refinancing locked us into our home for longer than we had planned.