Considering refinancing? There are so many alternatives, how to pick the right one? We have gathered the most useful and up to date information for choosing the right refinancing option for you. We hope this site proves useful for you in your quest! Don't forget to bookmark us!
by Carrie Reeder
Refinancing an adjustable rate mortgage (ARM) is a common practice for borrowers. However, it may not always be the best option. Depending on how high interest rates climb, there are cases when you could end up spending more on converting your mortgage than you would save with a locked in interest rate.
Adding Up Costs
Before you jump on a refinancing offer, consider the upfront costs. To refinance a $100,000 loan, you can expect loan fees to range from $1000 to $3000. That is not including points for lower rates.
In order to recoup these origination costs, you need to be planning to spend several years in
your home. Also, if you only have a couple of years left on your mortgage, you may be better off with your original mortgage.
Benefits Of Refinancing
Locking in a low rate is the most common benefit to refinancing an ARM. By converting to a fixed rate mortgage, you are guaranteed a low interest without worrying about yearly interest rate fluxes.
You can also build up your equity sooner by converting to a biweekly mortgage or short term loan. With larger monthly payments, you can potentially save thousands on interest payments.
When Not To Refinance
With an ARM there is always some
risk involved, but there are cases when keeping your ARM makes financial sense. For instance, unless interest rates will rise more than a couple of percentage points over the course of your loan, you will probably pay more in loan fees than you will save. You should also keep your ARM if current rates are only 1% or lower than your ARM's rate.
You may also want to keep your ARM if you are planning to move soon. With homeowners moving within seven years of buying a home, it doesn't make sense to refinance when you won't recoup the costs.
Picking A Lender
Just like with any mortgage, you want to be sure that you
have researched several lenders before choosing one. Request quotes on both rates and fees. You will need to add up total costs to find the best financing package. You can also use the internet to find online mortgage lenders. Many times these lenders will offer lower interest rates or low closing costs to remain competitive.
About the author:
See my recommended Home Mortgage Refinance Lenders for the lowest rates online. Carrie Reeder is the owner of ABC Loan Guide, which offers help finding low rate home mortgage loans.
1st And 2nd Mortgage Refinance Loan
Refinancing a first and second mortgage requires some extra considerations. Depending on your equity, you may find that combining the two mortgages results in a higher interest rate. You may also find that you have to carry PMI with the...read more
Bad Credit Auto Loan Refinance - How To Refinance An Auto Loan
The majority of people refinance an auto loan to acquire a lower interest rate or shorten the length of a loan. However, if you have bad credit, getting a low rate auto refinance may be challenging. For the most part, lenders only offer prime rates...read more
Refinance Car Loan - Apply Online For Fast Quotes
Refinancing a car loan can save you money on interest payments and lower your bill, but only if you find the right deal. Luckily, online car loan lenders can help you sort through rates and fees with fast quotes. Just by entering basic info, you...read more
Refinance Mortgage Loan – Tips on Refinancing Your Home Mortgage
Refinancing your home mortgage can come with some great perks. If you do it with no money out of pocket, you can skip one to three mortgage payments. You can save money on your payment or pay off your entire mortgage faster when you have better...read more
Refinance & Mortgage Tips: Down Payment With Gift Letter
If you are a first time home buyer who has been out shopping for that dream house, you've probably already heard your real estate agent or property developer's first question: "How much will you be putting down?" If you have excellent credit,...read more
Sometimes the best deal isn't the right deal when it's time to refinance your home
Many people are looking to refinance their home as a means of pulling money from their rapidly rising real estate. The intent may be to reduce other debts, finance a vacation or maybe you're just looking at refinancing your home as a means of...read more
Three Ways To Refinance Your Car Loan
Whether you need to reduce your car loan monthly installments or you want to save money by exchanging expensive debt with new cheaper debt, you need to ponder the different financial products available for refinancing as not all of them will aid...read more
Need more information? Try a search: