What is refinancing? Most homeowners have heard of the process and know a little bit about it but aren't sure what option is right for them and their specific situation. Refinancing a home loan is the process of securing a new loan for your home, usually with better terms, and paying off the old loan. Most do it because it allows them to lower their interest rates and/or monthly payments and can allow them to tap into the equity in their homes. Below is a list of your options as far as types of refinance loans.
5 Tips Refinancing
1) Adjustable Rate Mortgage. With this loan, your rate of interest stays the same for a couple of years, then adjusts based on several economic factors. The rate could go up or it could go down. Most times, it goes up. Only choose this option if you are fairly certain it will go down.
2) Fixed Rate Mortgage. Your interest rate and monthly payment never change. There are no surprises with this loan, but the rate of interest is significantly higher than it is with an adjustable rate mortgage. Choose this loan if the rate being offered to you is less than the one you currently have.
3) Balloon Loan. This type of refinance loan is the perfect option for some homeowners because it offers them low monthly payments for an extended amount of time. The rate is fixed for between five and ten years. After that predetermined time is up, the full loan amount is due in one "balloon" payment. The best thing about this loan is that the fixed interest rate is very low. This loan takes a lot of strategy and planning to make work.
4) Home Equity Loan. This loan offers you a fixed interest rate so your monthly payments never change and allows you to pull out money from the equity in your home. This is the best way to get cash for renovations or investments, while keeping your monthly payment manageable and consistent.
5) Line of Credit. This is basically a loan from the lender to you, using your home's equity as collateral. The payments you make are almost always interest only. This isn't technically a refinance loan.
Do not commit to any loan without knowing for sure that it contains the best rates and other terms for you. The lenders are out to get the best deal for them. Visit the Online Home Loan Directory [http://www.onlinehomeloandirectory.com] for information on how to get the best deal for you. It's a free online resource looking out for borrowers.
For more information on refinancing options, visit
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