Refinancing can lower your monthly payments if the amount you owe has gone down significantly, or if you want to extend the term. If interest rates are lower than your existing mortgage, this may also lower your monthly payments.
A lower interest rate can not only reduce your long term interest savings, but it can lower your monthly payment, too. Choosing a shorter term or taking advantage of a lower rate environment are just some of the ways to lower your interest rate.
Use the equity in your home and get cash out to start that home improvement project, take that big vacation or use the funds for whatever you have your heart set on.
If you have an adjustable-rate mortgage (ARM), after the initial period, the interest rate on your loan can rise or fall over time based on market conditions. Refinancing your ARM loan with a fixed-rate mortgage can help you avoid having a higher monthly mortgage payment.
Your home equity can be a powerful financial tool. Whether you're planning renovations, consolidating debt, or covering unexpected costs, understanding your borrowing options is key.
1. Home Equity Loan (Second Mortgage)
How it works: Get a lump sum of cash upfront.
Best for: Large, one-time expenses like major home renovations or significant purchases.
Key feature: Fixed interest rate, meaning predictable monthly payments.
2. Home Equity Line of Credit (HELOC)
How it works: A revolving line of credit you can draw from as needed, similar to a credit card.
Best for: Ongoing or unpredictable expenses, like phased home projects or ongoing tuition.
Key feature: Variable interest rate; you only pay interest on what you borrow.
3. Cash-out Refinance
How it works: Replace your current mortgage with a larger one, receiving the difference as cash.
Best for: Accessing a significant lump sum and potentially lowering your overall mortgage rate if current rates are favorable.
Key feature: One new mortgage payment for your entire loan.
Important Considerations:
• Your home is collateral.
• LTV (Loan-to-Value) limits apply.
• Credit score and income impact eligibility.
• Be aware of fees and closing costs.
• Always consult with your mortgage broker to help you find the best lender to fit for your needs.