Refinancing: Which Option is for You?
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When you are overwhelmed with so many choices, it may seem like there are even more refinance programs than applicants! We can guide you to locate the refinance loan program that will fit your situation the best. Contact us at (951)840-4188 to get things started. There are some general things to have in mind while you review your choices.
Lowering Your Payments
Are you refinancing primarily to lower your rate and monthly payments? In that case, getting a low, fixed-rate loan might be a wise option for you. Perhaps you currently hold a higher rate fixed rate mortgage, or perhaps you hold an ARM — adjustable rate mortgage — where the rate of interest varies. Unlike the ARM, your low fixed rate mortgage stays at a certain low rate for the life of the mortgage loan, even when interest rates rise. This can be particularly a good choice if you don't expect to sell your home within the next 5 years or so. However, if you can see yourself selling your home within several years, an adjustable rate mortgage with a low initial rate may be the ideal way to lower your monthly payment.
Refinancing to Cash Out
Is "cashing out" your primary reason for your refinance? Your house needs new carpet; your son has been accepted to college and needs tuition; or you have a special family vacation planned. In this case, you need to get a loan for more than the balance remaining of your present mortgage or you may consider a 2nd mortgage instead.
Debt Consolidation - 2nd Mortgage
Do you want to cash out some equity to consolidate other debt? Great plan! If you have enough equity, paying off other debt with rates higher than your mortgage (credit cards or home equity loans, for example) could help save you a chunk of money each month.
Paying it off Faster
Do you hope to build up equity quicker, and pay off your mortgage sooner? You should consider refinancing to a short-term loan, such as a 15-year mortgage loan. Your mortgage payments will likely be higher than they were with the longer term mortgage loan, but in exchange, that you will pay substantially less interest and will build up equity quicker. However, if you have held your current 30-year mortgage for a number of years and the remaining balance is relatively low, you may be do this without raising your monthly mortgage payment — you could even be able to save! To help you understand your options and the multiple benefits in refinancing, please call us at (951)840-4188. We are here to help you reach your goals!
Curious about refinancing vs a 2nd mortgage? Give us a call: (951)840-4188.