Refinancing your current home loan can offer you the benefit of restructuring your current monthly payment and net you savings in the short term and long term.
When you decide to refinance your current home mortgage loan, you have different options to consider. To help determine which options are best, you should determine what you want to achieve with the refinance.
Do you want to:
- Lower your interest rate?
- Do a cash out refinance?
- Refinance to restructure debt from other credit sources to benefit from lower interest rates and tax advantages?
You may have other reasons that will motivate your decision to refinance. In each situation, consider options to:
Lower Your Payments
Are your refinance goals to lower your rate and consequently your mortgage payments?
A low, fixed rate loan may be the ideal option for you.
Do you have an ARM (Adjustable Rate Mortgage) or a fixed mortgage with a high rate? Those are loans that you might want to refinance. Right now, with interest rates are still very low. By refinancing you can lock in a new loan at today’s lower rate. This can give you benefits now and in future years as interest rates adjust higher.
When interest rates rise, a fixed-rate mortgage will remain at the same, low interest rate. In contrast, an ARM’s interest rates fluctuate over the life of the loan.
A fixed-rate mortgage is particularly a wise option if you don’t think you’ll be selling your home within the next five years or so.
If you do plan to sell your home more quickly, you should consider an ARM with a low initial rate in order to achieve lower payments.
Both loan types offer benefits to the borrower. The Premiere Financial team will go over your details to help you decide which loan is the best to achieve lower monthly payments.
Getting Out some Cash
Are you wanting to cash out some of your home equity in your refinance?
Maybe your home needs renovating; your daughter has gone to college and needs tuition; or you have a special family vacation planned.
A Cash Out Refinance is a loan higher than the balance remaining of your current mortgage loan. In this case, if your interest rate is currently high and you have held it for a long time, you could be able to reach your goals without a rise in your mortgage payment.
Do you want to cash out some equity (cash out) to put toward other debt?
If you have enough equity, paying toward other debt with higher interest that your home loan (credit cards or home equity loans, for example) could be able to save you a lot of money every month.
Getting a Shorter Term Loan
Are you hoping to fatten up your home equity faster, and get your mortgage paid off more quickly?
Contact us to find out about refinancing to a short term mortgage loan – such as a fifteen-year mortgage loan.
Although your monthly payments will probably be increased, you can save on interest; so your home equity will build up faster.
Conversely, if your existing longer term loan has a low balance remaining, and was closed a number of years ago, you could be able to make the move without paying more each month.
To help you understand your options and the multiple benefits in refinancing, please contact us at 760-930-0325. Our mortgage financing experts can match you with the refinance loan program that will help you reach your goals!