Which Mortgage is Right for Your Refi?
Home refinancing loans can be a real godsend. When owners seek home refinancing loans today they're looking to reduce their mortgages, receive lower interest rates from lenders, or free up large amounts of cash. Some homeowners use refi cash to pay off debts or finance large-ticket items like college educations, home remodeling projects, or automobile purchases.
ARMs or Fixed-Interest Refis?
Lenders typically offer two types of home refinancing loans: adjustable (ARMs) or fixed-rate mortgages. If you're considering a refi, keep an eye on interest rates and search out lenders with attractive initial rates and loan terms.
Many people find that ARMs are best suited for their home refinancing loan when present interest rates are volatile. The initial lender's rate is fixed at a relatively low figure for up to ten years, locking in predictable mortgage payments. After the initial period, however, you'll see annual increases based on market indexes.
A fixed-interest refi option may begin at a higher interest rate than an ARM, but the good news is it won't fluctuate over the full term and is less susceptible to spikes in interest rates in the economy. Mortgage lenders often present a range of term and rate options for home refinancing loans, so evaluate your immediate and long-term financial goals.
Thirty-Year Mortgages or Less?
It also pays to consider mortgage terms as key pieces of the refi puzzle. Lengthy thirty-year mortgages can establish lower monthly payments, which give you greater cash flexibility over time. But shorter 20 or 15-year refi terms can retire the mortgage sooner and spare you greater interest payments in the long run.