If you purchased your home with an Adjustable Rate mortgage and your loan is scheduled to reset soon you might consider refinancing. Many homeowners with Adjustable Rate Mortgages are concerned about the possibility of payment shock when the lender adjusts their interest rate. Here are several tips to help you decide if mortgage refinancing is right for you.
There are several ways you could benefit from refinancing your Adjustable Rate Mortgage. Refinancing your loan could get you:
A Better Margin
If your credit score is higher or you have higher income than when you took out your Adjustable Rate Mortgage, refinancing could get you a better margin. Mortgage lenders base the size of their margin on your credit and financial details at the time of your application. Better credit and more income will not only get you a better mortgage rate but a lower margin.
Payment Stability
The downside of Adjustable Rate Mortgages is that there is always the risk of payment shock if your payment or mortgage rate goes up too quickly when the lender adjusts your loan. Refinancing to a fixed rate loan or an Adjustable Rate Mortgage with better caps could protect you from the possibility of payment shock. Caps limit the amount your interest rate or payment can go up.
Shorter Term Length or Equity Loan
If you’d like to build equity in your home at a faster rate, consider refinancing your mortgage to a loan with a 10 or 15 year term length. This shorter term length will build equity in your home more quickly and you will pay less to your lender for the financing. Another option available to you when refinancing is cashing out equity in your home. You’ll get cash back at closing which you can use to consolidate your bills or make a large purchase.
You can learn more about refinancing your mortgage while avoiding paying too much with a free mortgage video toolkit.
To get your FREE Mortgage Refinancing Video Toolkit, visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free "Mortgage Refinancing Toolkit," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
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