Financing Options

Which Refinancing Options Are Best For You?

There aren’t quite as many loan programs as there are borrowers, but it seems like it sometimes. We’ll work with you to qualify you for the best loan program to fit your needs. But there are some general considerations when it comes to refinancing options.

Are You Refinancing Primarily To Lower Your Rate and Monthly Payments?

If so, then the best in refinancing options might be a low fixed-rate loan. Maybe you currently have a fixed-rate mortgage with a higher rate, or maybe you have an adjustable rate mortgage (ARM) where the interest rate varies. When you qualify for a new fixed-rate mortgage, you lock in that low rate for the life of your loan. This is especially a good idea if you don’t think you’ll be moving within the next five years or so. On the other hand, if you do see yourself moving within the next few years, an ARM with a low initial rate might be the best way to lower your monthly payment.

Are You Refinancing Primarily To Cash Out Some Home Equity?

Maybe you want to make home improvements, pay for your child’s college tuition or take your dream vacation. The reason doesn’t matter. The point is that you can use your home’s equity to get cash now. To do this, you’ll need to qualify for a loan for more than the balance remaining on your current mortgage. If you’ve had your current mortgage for a number of years and/or if you have a mortgage whose interest rate is higher, you may be able to do this without increasing your monthly payment.

Do You Want To Cash Out Some Equity To Consolidate Other Debt?

This is one of the smarter refinancing options you can choose. If you have the equity in your home to make it work, paying off other debts with higher interest rates than the interest rate on your mortgage — for example, credit cards, home equity loans, car loans, some student loans — means you can save possibly hundreds of dollars a month. What’s even more impressive is that you can often declare the interest you pay on these loans on your income taxes, something you can’t do with credit cards.

Do You Want To Build Up Home Equity More Quickly and Pay Off Your Mortgage Sooner?

If so, consider refinancing with a shorter-term loan, such as a 15-year mortgage. Your payments will be higher than with a longer-term loan, but in exchange, you will pay substantially less interest and will build up equity more quickly. If you have had your current 30-year mortgage for a number of years and the loan balance is relatively low, you may be able to do this without increasing your monthly payment — you may even be able to save.

For example, let’s say years ago you took out a $150,000 30-year mortgage at eight (8) percent. Your payment is about $1,100, exclusive of taxes, insurance and so on. If your balance today is down to $130,000, you could take out a 15-year mortgage at six percent and have an almost identical monthly payment. This is a great option for people whose main goal is not to save money on their monthly payment but rather to build up equity and pay off their home more quickly.

As you can see, there are many refinancing options available. To help you navigate through them, call us today at 1-888-848-1880.

M2 Lending Solutions 2000 S Colorado Blvd, Tower One Suite 1-3400 Denver, CO 80222