A mortgage refinance allows a homeowner to take out a loan that can be used to pay off or reduce the current mortgage. The process is relatively simple, and the entire process of refinancing an existing loan takes just a few weeks on average. If you currently have an adjustable-rate mortgage (ARM), you will qualify for mortgage refinance. Refinancing your home is an excellent way to reduce your monthly payments, and many homeowners choose this option when their current loan has reached its term limit. A refinance will lower your interest rate and monthly payments by as much as twenty percent.
You should first shop around for a mortgage refinance loan with a variety of lenders. Each lender is different and may not offer the same options. When you are shopping around you need to understand the terms of each lender refinance loan offer. You can learn a lot about the terms of different loans by comparing the first mortgage refinance offers from different lenders. Once you understand the basics of the process you can easily compare loan offers from different lenders and choose the best deal that meets your financial goals.
When you shop around for a refinanced mortgage, you also want to find out what type of refinance options are available to you. You can choose a fixed-rate refinance, a refinanced mortgage with negative amortization, or an adjustable-rate refinance. Fixed-rate refinances options available to homeowners include low down payments, long terms, and the ability to lock in the interest rate. On the other hand, adjustable-rate mortgage refinances options available to homeowners include no documentation loan and other options that require little paperwork. If you plan to refinance your current mortgage on your own, you may want to also explore the possibility of building equity in your home. Equity can be used for several purposes including home equity loans and second mortgages.
There are also several options available to you as a homeowner when you decide to refinance. Some options are to choose a longer-term; lower the interest rate; switch to a fixed rate, or eliminate some of the fees and penalties. You can use as much or as little of these options to save money on the cost of your refinancing. For example, by switching to a fixed-rate mortgage you will pay lower interest rates over the life of the loan. However, you might have to forfeit some of the discounts on your loan to make this switch. Likewise, if you choose to eliminate some of your fees and penalties you will also lose some of the benefits from choosing a shorter-term loan.
Homeowners can also benefit by taking on a second mortgage if they have equity in their home. By doing this, they will be able to lower their monthly payments and keep the same interest rates as before the refinance. However, by making larger monthly payments they will also be increasing the debt burden on their first mortgage. This is because the second mortgage has a higher interest rate than the original mortgage and it is secured by the equity in your home. The goal for this strategy is to replace the monthly payment of the first mortgage, thereby reducing the total cost of your mortgage, and then gradually increase your payments again as your equity grows.
As you can see from the information above, there are many ways to reduce the costs involved in mortgage refinancing. Remember that your first step is to comparison shop and talk with various lenders to see who has the 15 year mortgage rates and fees associated with their specific program. Then, once you find the lender with the best terms and program that offers the most equity, take steps to lower your monthly payments and make your monthly payments more affordable. By doing so, you will be able to get a lower mortgage refinancing quote and ultimately save thousands of dollars.