Refinancing Your Home Mortgage Loan Refinance Your Adjustable Rate

Refinancing Your Home Mortgage Loan Refinance Your Adjustable Rate Mortgage

Refinancing Your Home Mortgage Loan - Refinance Your Adjustable Rate Mortgage
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.

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