Refinancing means to pay off an existing mortgage with another one that is preferably at a lower rate.
Just about everyone who is in the market to refinance asks the same question – “When I refinance, should I get a fixed or adjustable rate mortgage?”
Since your home is about the most significant and important purchase you will ever make, that is a reasonable question to ask.
At first glance, fixed-rate mortgages seem like the best all around choice for most homeowners. Without fail, you know what your payment is for the next 15, 20 or 30 years depending on the term of your loan.
Is refinancing the best choice for you?
When you refinance, a fixed-rate loan may eliminate the risk of a rate increase down the road but that benefit can make a significant difference in your interest rate and payment amount. Homeowners who refinance with long term fixed rates typically pay one percentage point lower over the life of the loan than those who refinance with an adjustable rate mortgage or ARM.
Homeowners who refinance to an adjustable rate mortgage may save thousands of dollars in interest and refinancing fees due to the lower interest rates typically found in an adjustable rate mortgage than a fixed rate mortgage.
Our mortgage advisors will help you determine which option is best for your long-term financial goals.
Cash Out Refinancing
In a cash out refinance, you refinance your existing mortgage and borrow equity in a lump sum to use for other things. Some people choose to use a cash out mortgage for home improvement. Some use cash out equity for college tuitions or family vacations, or pay off high interest rate credit cards, etc.
Other reasons people use a cash out refinance is to use the equity in their home to invest in real estate. Sometimes the money from an equity loan can be used to start a business.
If you are looking to tap into the equity you have acquired in your home without touching your current mortgage, you may want to consider a Home Equity Loan.
With a home equity loan you can borrow the equity you have acquired without touching your first mortgage. The home equity loan is also referred to as a second mortgage.
The cash out refinance and the home equity loan are very similar and serve almost the same purpose. Your situation should determine the right choice for you.
Mortgage Refinancing for investments
Are you caught in the vicious cycle of debt? Even if you are, there are ways to get out of it. The traditional money lenders have morphed into banks, brokerage firms, and individual brokers.
Some options may help you manage your debt. It is the job of professional to help you figure out if mortgage refinancing is a good method for you.
As professional brokers, we can walk you through your options and help you with your long-term financial goals.
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