Refinancing: Which Loan Program is for You?
When you are overwhelmed with all the options, it may seem like there are even more loan programs than borrowers! Call us at 719-425-2226 and we can work with you to qualify you for the perfect loan program to fit your financial situation. There are some general things to keep in mind as you review the options.
Reducing Your Monthly Payments
Is your refinance primarily to lower your rate and monthly payments? Then your best option may be a low fixed-rate loan. An ARM (Adjustable Rate Mortgage) or a high fixed rate mortgage are loan programs that you might want to refinance. Different that the ARM, your low fixed-rate mortgage stays at a certain low rate for the term of the mortgage, even if interest rates rise. A fixed-rate mortgage is particularly a good choice if you don't think you'll be moving within the next 5 years or so. However, if you can see yourself selling your home in the near future, an ARM mortgage with a small initial rate may be the best way to bring down your monthly payments.
Refinancing to Cash Out
Is "cashing out" your primary reason for your refinance? Your home needs renovating; your daughter has gone to University and needs tuition; or you have a special family vacation planned. In this case, you'll need to find a loan for more than the balance remaining of your present mortgage loan.Then you will You will need to get a loan for more than the balance remaining of your present mortgage loan in that case. However, if your mortgage rate is currently high and you have held it for a long time, you may be able to accomplish your goals without making your mortgage payments rise.
Do you have other debt, maybe with high interest, that you need to consolidate? If you have the home equity to make it work, paying off other debt with higher interest than the rate on your mortgage (for example: car loans, credit cards, student loans, or home equity loans) means you can possible save hundreds of dollars monthly.
Switching to a Shorter Term Loan
Are you planning to fatten up your home equity faster, and pay your mortgage off sooner? You should consider refinancing with a short-term loan, like a 15-year mortgage. Even though your mortgage payment amount will probably be more, you will save on interest; so your equity will rise up faster. Conversely, if your existing longer term loan has a low remaining balance, and was closed a number of years ago, you may even be able to make the switch without paying more each month. To help you determine your options and the numerous benefits of refinancing, please contact us at 719-425-2226. We are here for you.