Liberty Lending Consultants and their caring mortgage professionals will give you the unmatched, personalized service you deserve to help you get the very best refinancing and mortgage loan at a low cost. But since there is more than just one refinancing option, here are some tips to consider that will help you with your financial decision.
1) Are you refinancing primarily to lower your rate and monthly payments?
Then your best option might be a low fixed-rate loan. Many people who have ARMs – adjustable rate mortgages – enjoy low rates today, but don’t have the security of knowing the rate will stay low. That’s why so many of our clients take the opportunity to refinance their home mortgage, locking themselves into a low fixed-rate mortgage for the life of their loan.
This may be your best financial avenue, especially if you plan on staying in your house for the next several years or so. However, if you do see yourself moving within the next few years, an ARM with a low initial rate might be the best way to lower your monthly payment.
Another reason you may want to cash out some equity is to consolidate other debt. If you have sufficient equity in your home to make this work, paying off other debts with higher interest rates can possibly save you hundreds of dollars per month. Such debts would include credit cards, home equity loans, car loans, some student loans, etc.
For example: Let’s say several years ago you took out a $150,000 30-year mortgage at 8.0%. Your payment is about $1,100, excluding taxes, insurance, etc. If your balance today is only $130,000, you might take out a 15-year mortgage at 6.0% and have an almost identical monthly payment. This is a great option for clients whose main goal is not really to save money on their monthly payment but rather build up equity and pay off their home loans and refinancing loans more quickly.
For more information on the home financing process, check out our blog!