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REFINANCING OPTIONS

CASH-OUT REFINANCE OR DEBT CONSOLIDATION 

A cash-out refinance replaces your current mortgage with another loan that pays off your current mortgage and allows the equity in your home to provide funds for other purposes. 

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TIMING

Often clients want to know when it the right time for a cash-out refi consider the following factors then give us a call:

  • Have the interest rates dropped significantly since your last refi?

  • Are you planning on staying in the home for a substantial amount of time?

  • Is there an option to shorten the loan term?

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FIXED-RATE vs ADJUSTABLE-RATE MORTGAGES

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FIXED RATE 

Fixed-rate mortgage are the most conservative loan option where principal and interest portion of the monthly payment never changes. Repayment terms can range from 10 to 30 years. ​

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ADJUSTABLE-RATE MORTGAGES

Also known as ARMs, if explained properly and used with a careful plan, are a great way to minimize monthly payments and maximize returns on investment. ARMs also have an interest-only option where you only have to pay your interest, and therefore lowering your monthly payment.

 

UNDERSTANDING ADJUSTABLE-RATE MORTGAGES (ARMs)

  • These loans are usually referred to as 3/1, 5/1, 7/1, and 10/1 ARMs

  • The first numbers above (3, 5, 7, and 10) represent the number of years your loan will be "fixed”, where your interest rate and payment will NOT change.

  • The second number, ( 1 ) signifies that after the "fixed” time period, your mortgage rate can be adjusted upward or downward ONE time every year. In the case of "5/1”, after the fifth year, your mortgage rate can be adjusted one time every year.

  • At the end of the "fixed” period, your interest rate is determined by your index and margin clearly noted in your mortgage or note.

  • Adjustable Rate Mortgages generally have lower initial fixed interest rates than your conventional fixed rate mortgages.

 

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