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Refinancing Home Loans
Refinancing home loans is perfect for borrowers who:
- Are unhappy with the term of their loan
- Would like the trade their adjustable rate loan for the stability of a fixed
rate
- Want the security of a lower rate cap on their adjustable rate loan
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Imperfect Credit
Securing your mortgage with a home or expensive automobile is another way for someone with bad credit to receive a loan with low interest rates and a lower down payment. Secured loans allow lenders to lend larger amounts at lower rates and often allows them to over look certain mistakes on your credit history.
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Home Construction Loans
Home construction loans are usually based on both the potential value of the home and the borrowers income. In order to estimate the value of a home that has yet to be built an appraiser will be called in to evaluate the kind of house that is being built, the materials used to build, the expense of the materials, the expense of labor, the expense of the land, and other miscellaneous costs.
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Rates
There are many different components to understand when you are trying to find the right loan. How long of a repayment period do you want? Do you qualify for a fixed rate? Is an adjustable rate better suited to your needs? Understanding the factors that create your loan can take the stress out of the decision making process and keep you from taking terms will eventually cost you money. Fill out our free short form to contact up to four lenders about your loan.
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Mortgage Calc
Primarily, a mortgage calc gives you your expected monthly payment, but it also shows you how a slight change can affect the repayment of your loan. A loan of $150,000 with a term of 30 years and an interest rate of 7% will have a monthly payment of $997. The calculator may also tell you that the total interest on such a loan would be $209,263. However, if you change the interest rate to 8%, the monthly payment increases to $1,100 and the interest increases to $246,232. This would mean that 1% made a difference of $103 every month for thirty years and a total of nearly $37,000 in payment of interest. Small changes in loan terms can add up, which is an especially important consideration for anyone looking in to refinancing.
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Mortgage Refiancing
However, interest rates are not the only reason to refinance your mortgage. Many homeowners find themselves unhappy with the terms of their loans. A loan with a thirty year term may offer low payments, but those very low payments that seemed attractive can slow the process of building equity. Changing to a 15 year term will allow you to build equity far more quickly, and often the increase in monthly payments is far less than most people expect.
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Refinancing Your Home
Also, if you are refinancing to change terms or to take cash out to cover a major purchase and are not as concerned about your rate, money down can be exchanged for an increased interest rate. Generally this is when a homeowner pays, or does not pay, the points that can affect the loan’s interest rate. One point is the same as one percent of the loan. On $100,000 loan, one point would be $1,000. Usually, each point unpaid adds 1/8 to ¼ of one percent to the interest rate. Depending on the borrower’s priorities, points may be paid or a higher interest rate may be taken. Borrowers should be careful of lenders offering refinancing that includes no points. This often means that higher interest rates are built in.
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