Rising gas prices can squeeze borrowers struggling with mortgages

March 05th, 2012

Gas prices have risen as concern has grown about a disruption in supplies from Iran. Drivers were paying an average of $3.688 a gallon for regular gas on in late February 2012, according to AAA. Whether or not gas prices continue to rise or fall, they can influence home ownership.

Monthly housing expenses

If you're planning to buy a home, you may use a mortgage calculator to figure out how much borrowing money will cost each month. The monthly payments are affected by current mortgage rates and the amount of the down payment. In addition to principal and interest, you'll have to pay for property taxes and homeowner's insurance.

But another expense that people often forget to factor in is the cost of gas to commute. When you have a long commute to work by car, you end up paying more money than if you bought a home closer to the job. Initially that commute may not be too much of a financial hardship. But no one can predict whether gas prises will rise or fall. If gas prices surge significantly, those travel expenses may become tougher to handle.

Should you refinance?

If you're already frustrated by the cost of commuting but can't move from your current home, refinancing could be one way to lower your monthly expenses. A refinance calculator can allow you to see whether monthly payments and interest can be lowered with a new home loan. When shopping around to get the best deal, use a compare loans calculator to evaluate offers from mortgage lenders.

The most recent run up in gas prices is certainly of concern to consumers. But despite the high prices, there appears to be more optimism about the U.S. economy. Regardless of what happens with gas prices or the broader economy, mortgage borrowers should always carefully evaluate their situation before applying for a new home loan or refinance.

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