Why should I refinance my home mortgage? The answers are not complex – but simple: there are three major reasons to refinance.
- A. Lower Interest Rates - If you can pay less to borrow the same amount of money, this is a no brainer. If the current interest rates are lower than they were when you bought your home, a refinance is a smart financial move. You’ll save money.
- B. Real Estate Value - All over the United States, home values have lessened, but are moving up – and when the full rebound comes – as it always does, it will change very quickly. The bubble will always burst, but it will always comes back, too. This is why many people are taking advantage of this to improve on their home or pay of old debts. Take advantage of your home equity without making a drastic change to your monthly payment – or refinance into a lower rate and lower payment – you’ll be glad you did!
- C. Flexibility - Banks today have so many different programs from interest only mortgages, 3 or 5 Year ARM’s and fixed rate mortgages – you will find what you need: a mortgage that fits your lifestyle and budget.
Refinance – Fixed or Adjustable ARM?
Refinancing is very popular right now – rates are low – Today there are several different refinancing options of which you can take advantage. For instance you can choose a fixed rate or an adjustable rate mortgage. A fixed rate mortgage will usually be for a term of 15 or 30 years and the interest rate will stay the same for the duration of the loan. An adjustable rate mortgage (ARM) means that after a term – 3 or 5 years, your interest rate can change (usually upwards). If you don’t plan on staying in your home for the long term, a 5 year ARM or a 3 year ARM can be a great choice for you. You can refinance almost anytime if need be – and the money you save will more than make this worth your while.
Refinancing a Home Loan – Interest Only Option
Have you heard of interest only mortgage options? Some find this program very beneficial and flexible, and depending on your current situation an interest-only refinance might be a solid choice. Best for short term financing with a real estate plan, the program is just as it sounds – you are only required to pay payments towards your interest each month. This usually reduces the payment significantly. You can always put money towards your principle when you want, it just takes a larger payment. Some people have used this option to get into a home that would otherwise be too expensive for their budget. This can be risky, but for some it’s worth the risk for the flexibility. An Empower Mortgage Planner should be able to advise if this kind of plan is right for you. There are pros and cons to every refinance option so make sure you’re educated before choosing.
Your best days are ahead,
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Oh absolutely – timely advice forsure. If not, then all hell will break loose: Of Mortgage Brokers, ARMs, Attrition and Marathons
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Now is the time to refinance. However, before you jump the gun, crunch the numbers. Find out what the fess and closing costs will be. Also inquire about the points refinancing will cost you. If the amount is $9,000, for example, you need to figure the “new savings’ and how long it would take to recoup the $9,000.
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