Refinancing can be tricky business for some homeowners. The most common mistake that most people who are looking to refinance make is failing to understand the refinancing process. Being educated about refinancing can really help you in the long run.
Refinancing is an opportunity to take advantage of new, lower rates and save on mortgage interest. Of course, you will only experience these benefits if you do it the right way. The first step in understanding refinancing and how to get the best deal is learning about the different types of refinance mortgages that are available for you. There are many different types of refinancing, and each one addresses particular goals.
Let’s take a look at the many types of refinancing:
Rate refinancing– Rate refinancing is the most common type of refinancing, and it involves replacing a current mortgage with a new one that has a lower rate. This will save you money every month on your current mortgage.
Term refinancing– This type of refinancing changes the term of a loan. A longer term keeps your monthly payments lower than a shorter term. Sometimes, home owners switch to a shorter term mortgage so that they will save on long-term interest charges. Other refinance to a longer term to make their payments more affordable.
Rate-and term-refinancing– Another one of the most common types of refinancing, rate-and-term changes both the rate and the term at the same time. It allows rolling closing costs and sometimes even property tax and insurance into the loan.
Cash-out refinancing– This involves pulling equity out of your property in the form of cash and replacement of your current mortgage. Cash-out refinancing is good for people who want to pay for college or a car loan.
Refinancing an equity loan– Refinancing an equity loan into a first mortgage gives the borrower one lower fixed-interest rate.
Refinancing home improvement homes– This type of refinancing is used to remodel or upgrade a house, and is almost always fixed. They carry a higher rate and can be rolled into a first mortgage when refinancing.
The Home Loan Advisor is a tool that was built to provide homeowners with insight into opportunities available in the current market, without having to shuffle through all of the clutter on the Internet. Not only does the Home Loan Advisor analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, but we match you with potential lenders who have products that may help you and provide you with a sense of stability. As an added feature of the Home Loan Advisor service, we provide you with a free home value report generated from Neighborhood IQ. All of these services are FREE! We hope that you take advantage of these tools to find a new loan that best fits your specific needs and opportunity.