Why is now a fantabulas time to refinance?
If you haven't read my blog lately, rates are extremely low right now. The last time they were as good as they are now was back in 2003-2004, and those were the lowest rates in 60 years. Now back to the standard info.
There aren't as many loan programs as there are borrowers, but it sure can seem like it sometimes! We'll work with you to qualify you for the best loan program to fit your needs. Through the use of our "total cost analysis" and the "equity repositioning analysis", we are able to show you several of the best options side by side. We provide these as a free service to you, so that you can truly compare and make an informed decision, without all the hype and jargon. The best and only "real" way to compare loans, is by looking at "what does this loan actually cost me over time". Anything else, only looks at a part of the overall cost and therefore can be misleading. We have invested thousands of dollars in specialized software, so that we can provide you with the best in depth analysis and comparison available anywhere in the market today.
We take on the role as your Trusted Mortgage Advisor and it will probably seem like we ask a lot of questions up front. But the reason we ask so many questions is to find out where does your mortgage fit into your overall financial plan, so that we may apply program recommendations based specifically on that and not just "I cheaper than the other guy approach".
Are you refinancing primarily to lower your rate and monthly payments? Then your best option might be a low fixed-rate loan. Maybe you have a fixed-rate mortgage now with a higher rate, or maybe you have an ARM -- adjustable rate mortgage -- where the interest rate varies. Even if it's low now, unlike your ARM, when you qualify for a fixed-rate mortgage you lock that low rate in for the life of your loan. This is especially a good idea if you don't think you'll be moving within the next five years or so. On the other hand, 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.
Are you refinancing primarily to cash out some home equity? Maybe you want to pay for home improvements, pay your child's college tuition bill, take your dream vacation, whatever. Then you'll want to qualify for a loan for more than the balance remaining on your current mortgage. If you've had your current mortgage for a number of years and/or have a mortgage whose interest rate is higher, you may be able to do this without increasing your monthly payment.
You want to cash out some equity to consolidate other debt? Good idea! If you have the equity in your home to make it work, paying off other debt with higher interest rates than the interest rate on your mortgage -- for example, credit cards, home equity loans, car loans, some student loans -- means you can save possibly hundreds of dollars a month.
Do you want to build up home equity more quickly, and pay off your mortgage sooner? Consider refinancing with a shorter-term loan, such as a 15-year mortgage. Your payments will be higher than with a longer-term loan, but in exchange, you will pay substantially less interest and will build up equity more quickly. If you have had your current 30-year mortgage for a number of years and the loan balance is relatively low, you may be able to do this without increasing your monthly payment -- you may even be able to save! For example, let's say years ago you took out a $150,000 30-year mortgage at eight percent. Your payment is about $1,100, exclusive of taxes, insurance and so on. If your balance today is down to $130,000, you might take out a 15-year mortgage at six percent and have an almost identical monthly payment. This is a great option for people whose main goal is not to save money on their monthly payment but rather want to build up equity and pay off their home more quickly.
