Home Mortgage
Choosing a home mortgage depends on your wants and needs. Regardless of your reason for mortgage refinancing -- be it to lower monthly payments or build equity faster -- you should contact several mortgage lenders. Starting here with FreeLoanComparison.com which will direct you to several lender’s to compare mortgage types, rates, and terms. Keep in mind mortgage lenders will likely vary in their costs and fees. FreeLoanComparison.com will direct you to a lender, so you can learn more about the variety of mortgage products and mortgage costs associated with home refinancing.
Mortgage lenders offer a wide range of mortgage interest rates and mortgage terms. You can lower your mortgage rate by paying discount points. A mortgage lender may offer, for example, a 6.75 percent mortgage with one point, or a 7 percent mortgage with no points. Typically, the lower the interest rate, the lower the monthly mortgage interest payment (depending on the mortgage term), but to keep up-front costs down, you may choose a higher mortgage rate with a no mortgage points option. In addition, many mortgage lenders may allow you to finance points and mortgage closing costs as part of the total home loan amount -- called a no-cost refinance.
The type of new home mortgage you select primarily depends on how long you plan to live in your home, your reasons for refinancing, and the amount of monthly payment you can comfortably afford.
Fixed-Rate Home Mortgages
Refinancing your home mortgage to a fixed-rate mortgage provides the peace of mind of knowing what the mortgage payment will be for the life of the loan (excluding property tax fluctuations). A fixed-rate home mortgage has the same home mortgage rate for the life of the loan. Home mortgage loan terms will vary among home mortgage lenders, but generally, fixed-rate home mortgages offer payment terms of 15, 20, and 30 years.
A FreeLoanComparison.com lender partner can provide information about the many home mortgage loan options for a fixed-rate home mortgage. A biweekly mortgage allows you to accumulate equity more quickly because payments are made every two weeks. Another type of fixed-rate home mortgage is a balloon mortgage. These loans offer lower interest rates for shorter-term financing, usually for seven years. At the end of the term, they require either another home refinance or a lump-sum payment of the loan. Balloon mortgages are not a common option for home loan refinancing.
For homeowners looking to leverage their home loan mortgage to expand
purchasing power, a Interest-Only Home Mortgage offers the benefit of a low, fixed-rate monthly mortgage payment. For the first 15 years, only mortgage interest, and possibly escrow payments of taxes and home owners insurance, are made every month. The home mortgage payment adjusts at the start of year 16 to cover home mortgage principal
as well as remaining home mortgage interest and, again, escrow payments
if necessary or desirable, due on the home mortgage loan for the remaining
15 years.
Adjustable-Rate Home Mortgages
Homeowners often choose to refinance to adjustable-rate home mortgages (ARMs) when home mortgage interest rates are high, or when they want to refinance a higher fixed-rate home mortgage for a lower-rate ARM. Home mortgage terms will vary among mortgage lenders, but generally, adjustable-rate home mortgages offer rate adjustment terms of one, three, five, seven, and sometimes ten years.
ARMs are tied to a financial index, which is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. Financial indexes fluctuate, so homeowners often choose to change from one type of ARM to another, or refinance with the same type of ARM, to get a lower rate. Although an ARM usually offers a lower initial rate, home mortgage payments can change periodically (usually once or twice a year). Interest rate changes typically are subject to a limit or cap for each adjustment and for the life of the loan.
A unique type of adjustable-rate home mortgage is the Two-Step Home Mortgage. This ARM adjusts only once, either at the fifth or seventh year of the loan; then the interest rate remains the same for the remaining 25 or 23 years of the mortgage term.
For more helpful tips on mortgage refinancing, home mortgages, reverse mortgages or a home equity line of credit, contact FreeLoanComparison.com today!
Last update: November 14, 2008
