Many people's financial decisions are closely tied to the economy of the country, which in turn drives most of our social and political problems. The so-called "mortgage moms" were recently named by industry analysts as a key group whose votes could be crucial to upcoming political campaigns. In today's economy, the female head-of-household (or co-head) plays a key role when it comes to making big purchases or decisions about refinancing a home. This should not be taken for granted.
A recent article in the Washington Post says that "The combination of flat wages and rising debt has made millions of middle-class households feel very vulnerable to unexpected changes in their finances. Most people can see that energy prices are going up and the housing market is getting worse. People with credit card debt or mortgages, whose monthly payments vary with interest rates, pay interest, which is a less obvious but powerful variable."
Mortgage moms are determined to find ways to deal with their current financial problems without holding their family's future hostage. Home refinancing is a common solution because it lets them combine their debts, get cash from their home's equity, and switch from an adjustable-rate mortgage (ARM) to a low fixed rate.
Homeowners are using traditional home refinancing for a variety of reasons, like avoiding the interest rate hikes that come with an ARM, now that there are more home loan options. Even though their monthly mortgage payments may go up a little, they will still be able to afford them for the life of the loan. Even switching from an ARM to another loan with an adjustable rate can save a lot of money, as long as the new loan has more attractive lifetime interest rate caps.
Home refinancing can also be used to get cash from the home's equity, which can be used for almost any financial need. Many homeowners use the money to pay off credit card debt with high interest rates, which could save them thousands of dollars in interest each year. This radical way to consolidate debt will only work if the family sticks to its budget and doesn't go back to the way it used to spend money.
Since so much depends on their choices, mortgage moms will do best if they take the time to research and compare their loan options before making a choice. Refinancing your home is one way to keep your "nest egg" stable in an economy that is always changing, but it is not the only way. As politicians get ready for the next round of campaigning, it seems likely that they will pay close attention to the mortgage moms and their concerns, since they have a big say in so many middle-class financial decisions.
