Refinance Mortgage Loans To Consider

With interest rates as low as they presently are

, refinance mortgage loans deserve some serious consideration. Depending on individual situations and current home equity status, there are number types of loans to think about. By looking at a cross section of loan types and matching that up with personal needs and goals, one can get a better idea as to which type of loan makes sense.

Prior to committing to refinancing the home, one might compare refinancing to getting an equity line of credit. Each type of mortgage loan has its merits. The line of credit is one way of pulling getting access to some money, but a refinanced loan is often away to lower overall monthly payments. The final choice would largely depend on one's specific goals.

But assuming that refinancing is the top choice, one should probably become familiar with the rates for a standard 30 year, fixed rate loan. If the difference in interest rates between one's current loan and a potential new loan is 1 percent or more, the refinancing might make a great deal of economic sense. Depending on the size of the loan, monthly payments could be reduced significantly.

For people who do not see themselves staying in the current home for more than a handful of years, another type of loan may be the answer. The kind of loan for this scenario might be a 5/1 or 7/1 ARM, or adjustable rate mortgage. These loans essentially offer the borrower a fixed rate for the a few years, after which the interest rate is subject to change. Starting rates for these loan vehicles tend to be significantly lower than the 30 year fixed rate counterparts.

For an even more aggressive approach, one might consider refinancing into an adjustable rate loan from the start. This can reduce the initial monthly payments by a significant amount, but is subject to change if market interest rates start to move upward. This is usually only recommended as a very temporary loan solution.

If, as mentioned previously, a little extra money is what someone needs, that can be accomplished through refinancing or through securing and equity line of credit. If the home has enough equity, the borrower may be able to take out a larger newer loan that can provide some leftover cash. This cash can then be used to do home repairs or pay off other bills, for example.

The aforementioned are meant to provide just a sampling of ideas for refinance mortgage loans. What the final choice is will depend on what each homeowner hopes to accomplish. But is should be comforting to know that there are a number of different options.

by: Kevin Johnson

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