The Latest Mortgage Refinance Boom
Many homeowners already know about the benefits of a mortgage refinance. You may have refinanced several years ago and you're now interested in lower payments. Homeowners with adjustable-rate mortgages may consider mortgage refinance if their rates are about to reset. Or, you might simply want to borrow against your home equity — a task that is easily achieved with cash-out refinancing.
Whatever your reason, you'll want to follow these steps when considering a mortgage refinance:
- Determine whether refinancing will actually save you money, or if the points, fees and other costs outweigh these benefits.
- Figure out how long you plan to remain in your home. If you plan to move within three to five years, for example, a mortgage refinance may not be a good choice.
- Remember that a mortgage refinance isn’t a miracle cure for debt or destructive spending habits. Any mortgage will require careful planning and dedicated follow through.
Why Get a Mortgage Refinance?
There are numerous answers to this question. Some homeowners need immediate access to cash, and their home equity represents a substantial financial investment they can tap into. For others, a mortgage refinance may result in better:
- Monthly payments
- Rate
- Terms
Mortgage Advice: Cash-Out Refinancing
A cash-out refinance involves borrowing more than you owe on your original loan. You'll receive the excess funds in the form of a check, which you can use for any purpose.
For instance, you might want to pay off medical expenses or revolving credit card accounts with a higher annual percentage rate (APR) than mortgage loans. Other homeowners prefer to use cash-out refinancing to cover home renovation costs.
Your new monthly payments may be slightly higher, depending on the total amount of the new loan and your original mortgage terms.
Trade an ARM for a Fixed Rate
During this recent mortgage refinance boom, many homeowners have refinanced in order to avoid increased rates associated with adjustable-rate mortgages. Imagine how substantially the rate on a $200,000 5/1 ARM can jump once the initial fixed-rate period is over. Without a mortgage refinance, your new monthly payments could increase by over $300!
Lower Your Monthly Payments
If you get a mortgage refinance at a lower interest rate, your monthly payments will most likely decrease as well. According to mortgage advice, lower payments mean better cash flow and an opportunity to save or invest the surplus.
Improve Your Loan Terms
Although you’ll probably pay more for a 30-year fixed rate, there are advantages to refinancing your ARM and improving your terms. Not only will you know exactly how much you'll pay each month, but lower rates will also provide a buffer if unforeseen economic factors send interest rates skyward. If you feel uncertain about the future of rates, but you know you’ll be in your home for more than seven years, switching to a fixed-rate mortgage could be a smart move.
The Next Home Refinance Boom
During the next refinance boom, homeowners will be afforded a special opportunity to make a radical change in what is probably their largest investment: their home mortgage. Mortgage experts recommend researching options and weighing each one's pros and cons in order to be able to make an informed decision.
Do you need mortgage help? Take advantage of mortgage advice, tools and mortgage refinance calculators on HomeLoanCenter.com. These free resources can help you narrow the field and find the right loan for you.
Need lower monthly payments?
Extra cash? A fixed mortgage rate?
Refinance Now!
Home Loan Center can help!
