Which refinancing options are best for you?
At Summit Mortgage, our top priority is to go through all the refinancing options in order to find the best loan program for your needs. You can help us by thinking about a few things in advance.
Are you looking for a way to lower your rate and monthly payment?
Do you have a fixed-rate mortgage with a high rate? Or do you have an adjustable rate mortgage (ARM)? Then a fixed-rate loan at a lower rate might be your best choice. It would enable you to lock in that rate for the life of your loan – an especially good strategy when you plan to stay in your home for at least five or more years. If you’re planning to move within five years, then an ARM with a low initial rate could be a better way to reduce your monthly payment.
Are you refinancing primarily to cash out some home equity?
Maybe you want to pay for home improvements, your child’s college tuition, or a dream vacation. Have you had your current mortgage for several years, or are you paying a higher rate than current interest rates? Then you might qualify for a loan that’s larger than the remaining balance on your current mortgage. You may not even have to increase your monthly payment.
You want to cash out some equity to consolidate other debt?
If you have the equity in your home to make it work, paying off other debt with higher interest rates than the rate of your mortgage could save you hundreds of dollars every month. This can be an ideal way to reduce or eliminate debt such as credit cards, home equity loans, car loans, or student loans.
Do you want to build up home equity more quickly, and pay off your mortgage sooner?
It does wonders for your peace of mind to know that you’re financially well positioned for the years ahead. If building home equity and paying off your mortgage sooner is a priority, we can help you find the best way to do it.
By refinancing with a shorter-term loan such as a 15-year mortgage, your payments may be slightly higher or even the same than for a longer-term loan, but you’ll pay substantially less interest over time, and build up equity more quickly.
For example, say you’ve got a $150,000 30-year mortgage at 8% years ago. Your monthly payment is about $1,100 (exclusive of taxes, insurance, and so on). If your loan balance is down to $130,000 today, you might take out a 15-year mortgage at 6% and have an almost identical monthly payment. If you’ve had a 30-year mortgage for many years and your loan balance is relatively low, you may even be able to reduce your monthly payment.
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