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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!