Refinancing an adjustable rate mortgage can help you to secure lower
rates, better caps, and cash out your equity to pay off bills or remodel
your home. Refinancing is the time to consider your risk level, cash
flow, and future home goals. With a number of lenders competing for your
business, you can find a home loan that offers both favorable rates and
terms.
Better Rates With An Adjustable Rate Mortgage
Adjustable rate mortgages (ARM) are just like their name implies –
changeable. Based on an index, your loan’s rate changes as rates go up and
down. That’s great if rates fall, but can leave you in a bind if rates
rise too much.
The prime benefit of an ARM is that offer lower rates than fixed
mortgages, at least initially. So not only is interest cheaper, but your
monthly payments are also smaller.
Since most people only stay in their homes for seven years, the risk of
an ARM is limited. However, if you are planning to keep your next
mortgage for several years, be open to the option of a fixed rate mortgage.
Protecting Yourself With Caps
When refinancing your mortgage, be sure that you are protected with
favorable caps on rates and payments. The lower your caps, the higher your
rates will be. You may also find that your loan period extends if rates
go up too much.
With an ARM it’s just as important to investigate the caps as the
rates. And the best caps are the ones you are comfortable with. For
instance, if you expect to get a promotion with a raise in the next year, you
may not worry about the risk of rate hikes. So with peace of mind, you
can select a lower rate ARM with higher caps.
Tailoring Terms To Meet Your Needs
Refinancing is the time to tailor mortgage terms to meet your needs. If
you need to cash out your equity, now is the time to do it so you can
save on later application fees and interest costs. You can also decide
to shorten your loan period to help you pay off your house faster.
Try using one of ABC Loan Guide's
Recommended Low Interest Rate Mortgage Refinance Lenders.
To be sure you are getting the best deal on your next home loan,
research lenders. Ask for loan estimates and read the fine print. With online
mortgage companies, you can get detailed information in just minutes.
View our recommended companies for Bad Credit Mortgage Refinance.
Also, view our recommended sources for a
Free Copy of Your Credit Report.