*We need to identify your primary reason for refiancing.*
Are you refinancing primarily to lower your rate and monthly payments? Then your best option might be a low fixed-rate mortgage. Maybe you have a fixed-rate mortgage currently with a higher rate, or maybe you have an ARM (adjustable rate mortgage) where the interest rate changes. Most Arm programs have low interest rates to start. Unlike an ARM, when you qualify for a fixed-rate mortgage you lock that low rate in for the life of your loan. This is especially a good idea if you are going to live in the home for a minimum of the next five years. On the other hand, if you do see yourself moving within the next few years, an ARM with a low initial rate may be the best way to lower your monthly payment.
Are you refinancing primarily to use your home equity as cash? Maybe you want to pay for home improvements, pay your child's college tuition bill, or invest for retirement. Then you'll want to qualify for a loan that is high enough to include the amount of your exisiting mortgage and the cash you need. If you've had your current mortgage for a number of years and/or have a mortgage with a higher interest rate, you may be able to refinance without increasing your monthly payment.
This loan also applies if you would like to consolidate other debt? Is this a Good idea? If you have enough equity in your home to make it work and you are paying off other debt with higher interest rates than the interest rate on your mortgage -- for example, credit cards, home equity loans, car loans, some student loans -- consolidating may save you money monthly. However, we need to be very causous when doing this to be positive this will help your long term financial plan.
Would you like to create home equity faster, and pay off your mortgage sooner? Consider refinancing into a shorter-term loan, such as a 15, or 20 year mortgage. Your payments may be higher but in exchange, you will pay substantially less interest and will build up equity more quickly by paying down the balance faster. If you have had your current 30-year mortgage for a number of years and the loan balance is relatively low, you may be able to do this without a large increase to your monthly payment. You may even be able to save money monthly! This is a great option for people whose are retiring shortly or have a financial plan for there future.
Speaking with a Mortgage Specialist at Alliance Lending Services will allow you to become informed with all of your options availble to your current financial situation. This is the most important option of all... Understanding how to make your mortgage work for you. If you have questions about your unique situation please submit your questions or contact one of our Mortgage Specialists.
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