Mortgage Refinancing Options
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Which Mortgage Refinance Loan Option is Best for You and Your Family?
The mortgage professionals of Liberty Lending Consultants provide the unmatched, personalized service you deserve to help you get the very best low-cost mortgage refinancing for your existing mortgage. But since there is more than just one option in mortgage refinancing, here are some tips to consider to help you make the best decision for you.
1) Are you refinancing primarily to get a lower interest rate or get a lower monthly payment?
Then your best option might be a low fixed rate mortgage. People who have an adjustable rate mortgage 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 mortgage loan.
This may be your best financial avenue, especially if you plan on staying in your house for the next several years. However, if you do see yourself moving within the next few years, an ARM with an initially lower rate might be the best loan type to get a lower monthly payment.
2) Are you refinancing primarily to cash out some home equity?
Homeowners do this all the time to help pay for home improvements, a child’s college tuition bill, or maybe take your long overdue dream vacation. Whatever your goal, Liberty Lending can help find you the right lender to get you there sooner with fewer obstacles. And the good news is, if you’ve had your current mortgage for a number of years and/or have a mortgage with a higher interest rate, you may be able to refinance without increasing your monthly mortgage 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 card debt, home equity loans, car loans, some student loans, etc.
3) Do you want to build up home equity more quickly, and pay off your home mortgage loan sooner?
Another option that you may consider would be refinancing with a shorter-term home loan, such as a 15-year mortgage. Of course, your payments may be higher than they would be with a longer-term (30-year) loan, but in exchange, you will pay substantially less interest and will build up equity more quickly.
For example: Let’s say several years ago you took out a mortgage with the loan amount of $150,000 for 30 years 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 an excellent option for clients whose main goal is not really to save money on their monthly payment but rather to 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!
Frequently Asked Questions About Refinancing
Q: I don't have equity, can I refinance?
A: There are many products out there for people who don’t have equity. Harp 2.0, FHA Streamline and others may allow you to refinance even if you are upside-down on your equity position. In fact, they were designed to help people in that situation.
Q: If I refinance, won't I be starting over?
A: Many people aren’t aware that there are products out there for varying terms. You can get loans in 30, 25, 20, 15 and 10-year increments. Many times people can decrease their term and keep their payment about the same or even lower it!
Q: Can I afford to refinance?
A: Many times closing costs are very low, and sometimes zero, or they can be rolled into your mortgage. Act now, and you may be able to skip two house payments, and get an escrow refund, while still lowering your payment and/or term. You can use these savings to pay down your mortgage, to pay other bills, to go on vacation, for home improvements or virtually anything else.
Q: Does my credit qualify?
A: Don’t let your credit hold you back. It doesn’t cost you anything to inquire. If there is a credit issue, many times we can help you get your score increased, allowing you to qualify and/or get a better rate.
Which Mortgage Refinance Loan Option is Best for You and Your Family?
The mortgage professionals of Liberty Lending Consultants provide the unmatched, personalized service you deserve to help you get the very best low-cost mortgage refinancing for your existing mortgage. But since there is more than just one option in mortgage refinancing, here are some tips to consider to help you make the best decision for you.
1) Are you refinancing primarily to get a lower interest rate or get a lower monthly payment? Then your best option might be a low fixed-rate mortgage. People who have an adjustable rate mortgage 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 mortgage loan.
This may be your best financial avenue, especially if you plan on staying in your house for the next several years. However, if you do see yourself moving within the next few years, an ARM with an initially lower rate might be the best loan type to get a lower monthly payment.
2) Are you refinancing primarily to cash out some home equity? Homeowners do this all the time to help pay for home improvements, a child’s college tuition bill, or maybe take your long overdue dream vacation. Whatever your goal, Liberty Lending can help find you the right lender to get you there sooner with fewer obstacles. And the good news is, if you’ve had your current mortgage for a number of years and/or have a mortgage with a higher interest rate, you may be able to refinance without increasing your monthly mortgage 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 card debt, home equity loans, car loans, some student loans, etc.
3) Do you want to build up home equity more quickly, and pay off your home mortgage loan sooner? Another option that you may consider would be refinancing with a shorter-term home loan, such as a 15-year mortgage. Of course, your payments may be higher than they would be with a longer-term (30-year) loan, but in exchange, you will pay substantially less interest and will build up equity more quickly.
For example: Let’s say several years ago you took out a mortgage with the loan amount of $150,000 for 30 years 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 an excellent option for clients whose main goal is not really to save money on their monthly payments but rather to build up equity and pay off their home loans and refinancing loans more quickly.
What is Mortgage Refinance?
Mortgage refinance, also known as home refinance, is the process of replacing your existing home loan with a new one. It allows homeowners to secure better loan terms, interest rates, or change the loan structure to suit their financial needs.
Why Would Someone Consider Refinancing Their Mortgage?
There are several compelling reasons homeowners may choose to refinance their mortgage, including:
- Lower Interest Rates
- Reduced Monthly Payments
- Switching Loan Types
- Access to Home Equity
What Are the Benefits of Refinancing a Mortgage?
Refinancing your mortgage yields several advantages, such as:
Interest Savings
Improved Cash Flow
Debt Consolidation
Funding Renovations
Are There any Risks or Disadvantages Associated with Refinancing a Mortgage?
While mortgage refinance offers significant benefits, it’s essential to consider potential risks, including:
Closing Costs
Extended Loan Term
Adjustable-Rate Mortgage (ARM) Risk
Can I Refinance My Mortgage if I Have a Low Credit Score?
Having a low credit score may affect refinance options, but some lenders offer programs tailored to borrowers with less-than-perfect credit, providing an opportunity to improve credit over time.
How Much Can I Save by Refinancing My Mortgage?
Potential savings from refinancing depend on factors like current interest rates, the new loan term, and outstanding mortgage balance. Online mortgage calculators can provide estimates based on individual circumstances.
What Paperwork and Documents Are Needed for a Mortgage Refinance?
To facilitate the refinance process, gather these essential documents:
Proof of Income (pay stubs, tax returns)
Employment Verification
Credit Score and History
Bank Statements
Property Appraisal
Homeowner’s Insurance Information
Existing Mortgage Information
How Long Does the Mortgage Refinance Process Take?
The time to complete a mortgage refinance varies based on factors like lender workload, documentation accuracy, and transaction complexity. On average, the process takes 30 to 45 days, with possibilities for faster or more extended periods.
At Liberty Lending, we are dedicated to providing expert guidance and tailored solutions for your mortgage refinance needs. Whether you’re seeking a mortgage refinance or home refinance, our team is ready to assist you every step of the way. Contact us today to embark on a seamless and informed refinancing journey.