| Refinancing home mortgage loans can be tricky, | | | | mortgage refinance as you do for a basic home |
| especially when the housing market is experiencing | | | | mortgage. Some of the loan forms are very |
| some turbulence. If you’re considering a mortgage | | | | “creative”, and are meant for specific situations. |
| refinance, it’s important to understand the options | | | | Others are more basic. |
| that are available so that you can choose the home | | | | Fixed Rate Home Mortgage Refinance |
| mortgage refinance loan that is best for your situation. | | | | One of the most common reasons for refinancing a |
| There are as many different loan configurations for | | | | mortgage is to switch from an adjustable rate |
| refinancing your home mortgage as there were for | | | | mortgage to a fixed rate mortgage. The biggest |
| your original mortgage, if not more. Before you decide | | | | advantage of a fixed rate mortgage is that your |
| on a specific refinancing option, be sure that you | | | | monthly mortgage payment remains the same |
| understand each kind of loan and are clear on what it | | | | throughout the entire life of your loan. Fixed rate |
| is you want to accomplish. | | | | mortgages usually carry slightly higher interest rates |
| Is it time to refinance? | | | | than adjustable rate mortgages, and often require |
| Before you start shopping around to refinance your | | | | better credit scores to secure. |
| loan, take the time to decide if refinancing is your best | | | | Adjustable Rate Home Mortgage Refinance |
| option at this time. Among the things you should | | | | Adjustable rate mortgages are also known as ARMs. |
| consider before choosing to refinance your mortgage | | | | With an adjustable rate mortgage, the interest rate |
| are the following: | | | | that you pay can increase or decrease based on a |
| - Why do you want to refinance your | | | | stated index. The biggest advantages to an adjustable |
| mortgage? | | | | rate mortgage are that they generally start out with a |
| The most common reasons for refinancing a home | | | | lower interest rate than a fixed rate mortgage, and |
| mortgage are to lower the monthly payment, to | | | | that there is a possibility that your interest rate will fall if |
| shorten the time it will take to pay off your mortgage, | | | | the index used decreases. |
| to swap from an adjustable rate mortgage to a fixed | | | | Hybrid ARM Mortgage Refinance |
| rate mortgage or to reduce the overall amount that | | | | Hybrid ARMs are a cross between fixed rate and |
| you’ll end up paying for your loan. | | | | adjustable rate loans. Generally, lenders offer hybrid |
| - How much will it cost you to | | | | ARMs with very attractive fixed rate teaser rates. |
| refinance your loan? | | | | The original fixed rate may be good for 2, 3 or 5 |
| A refinance will incur the same closing costs and fees | | | | years. At that point, the mortgage resets to an |
| that your original mortgage did. In addition, you may | | | | adjustable rate mortgage that is indexed to current |
| have to pay an early repayment fee on your original | | | | interest rates. The biggest advantage of a hybrid ARM |
| mortgage that can be as much as two to three | | | | refinance is the introductory period, which often allows |
| month’s mortgage payments. | | | | a homeowner to buy “more house” than they |
| - Can you get a lower interest rate on | | | | could typically afford without the low introductory |
| a new mortgage? | | | | years. |
| One of the best reasons to refinance is because | | | | Cash-out Refinance Mortgage |
| interest rates have dropped since your original | | | | If your equity in your home is worth more than the |
| mortgage, or because your credit score is significantly | | | | amount remaining to pay on your current mortgage, |
| better and can get you a lower interest rate. In general, | | | | you may be able to take out a “cash out refinance |
| if you can get a interest rate that’s a full | | | | loan”. Depending on the lender, you can take out a |
| percentage point lower, it’s a good time to | | | | loan for up to 125% of your home’s value, pay off |
| refinance your mortgage. | | | | your current mortgage, and use the rest of the cash |
| - How long are you intending to stay in | | | | that’s left for other uses. |
| your house? | | | | Various lenders may also offer special options with |
| The longer you are planning to stay in your current | | | | their loans to make them more enticing. Those options |
| house, the more benefit you’ll get from refinancing | | | | might include payment holidays, payment of closing |
| your mortgage. Generally, if you’re planning to | | | | costs and flexible payments that allow you pay off |
| remain in your house for at least four more years, | | | | your mortgage early with no penalty. Before you |
| it’s worth it to refinance your mortgage. | | | | choose a refinance loan, take the time to compare |
| Home Mortgage Refinance Options | | | | several loan offers from different lenders so that you |
| In general, you’ll have all the same options for a | | | | can be sure of getting the best loan for your purposes. |