Most consumers have been somewhat confused about interest rates today and where to start in the search for a new refinance home mortgage loan. There is no doubt that interest rates today are very low, however it is also true that not everyone will qualify for the lowest interest rate or at least a comparable rate. The following pointers and suggestions will assist you in the process of finding the most affordable refinance home mortgage loan and getting your existing home loan renewed.
First and foremost, the real estate market has suffered tremendously over the past two years. Homes are selling for less than half of what they once cost in the spring of 2021. Homeowners are concerned with how long the real estate market will stay depressed, and they are afraid that the worst is yet to come. It is imperative that homeowners take time to sit down with a mortgage lender and determine if refinancing is really the answer for them.
If a homeowner is interested in refinancing to a fixed interest rate, there are many qualified candidates for these mortgages. The real estate market is experiencing some fundamental problems with the subprime mortgage fiasco. Many buyers are unable to obtain either a fixed rate mortgage or an adjustable rate mortgage. The result is that these borrowers are trapped in a cycle of high interest rates and falling income.
A second option for homeowners would be to refinance to a fixed rate with a shorter amortization schedule. Typically, this occurs when a homeowner has some unused equity built-up in their home. Rather than pay higher monthly payments, they can elect to pay off their mortgages much faster by making smaller monthly payments. The end result is that they only need to repay a small fraction of their mortgage principal.
Many homeowners who are interested in refinancing find that an interest only mortgage is the right choice for them. With this type of mortgage, the outstanding principal balance is replaced with an interest only payment each month. Interest only mortgages are much more flexible than a fixed rate mortgage. As a homeowner’s home loan debt increases, the amortization schedule is adjusted to reflect the new outstanding principal. In some cases, a 30-year fixed rate mortgage with a longer amortization schedule may make more financial sense. However, when this option is used, it is important to evaluate whether the short-term increase in monthly payments will actually have a significant impact on the quality of living.
Homeowners who are looking at refinancing can obtain a credible home loan refinance calculator that allows them to enter in required information. Once this information is entered, the calculator will generate a list of possible outcomes. These outcomes can include fixed-rate mortgage, an interest only mortgage and an adjustable-rate mortgage. The results will help homeowners weigh the pros and cons of each option.
Those homeowners who have little or no equity in their homes should consider refinancing to purchase a home with more equity. This type of mortgage will offer much more flexibility. It can also help homeowners who are struggling financially meet their payments. A fixed-rate mortgage would work best for this group because the monthly payment amount would not increase until the outstanding principal balance decreases. An interest only mortgage would require the borrower to pay more interest due to the amount of money left on the loan after the outstanding principal is decreased.
Many homeowners mistakenly believe that interest rates today are still low. Unfortunately, they are still very high, especially after making big mortgage loans during the housing boom. A credible mortgage advisor can help homeowners understand how the mortgage rates are determined. A knowledgeable advisor can explain the different mortgage options and what homeowners can do to lower their interest rates. Homeowners need to be aware of the interest rate that is currently being offered by the mortgage lender.