Lowest Mortgage Refinance Rates
Here are a few ideas and tricks to help you qualify for the lowest mortgage refinance rates.
Select the Right Mortgage
Certainly, there's no better way to acquire the lowest mortgage refinance rates than by choosing the right mortgage for your needs. The wrong mortgage might give you a lower rate, but it will not make you debt-free in the long run. Eventually, you'll be forced to take out another mortgage to correct your mistake.
The Different Types of Mortgages
To create accurate and smart decisions, make sure that you're examining rates for the same type of mortgage. It's important to know as well what the benefits and drawbacks of each type of mortgage as these can help you determine whether you're in the position to pay your loan on time.
Fixed Rate Mortgage
If you never want to compute for next month's interest rate and if you'd like to stay away from being taken by surprise by changes in your monthly dues then a fixed rate mortgage is the ideal for you. Fixed rate mortgages allow you to pay the same amount each month. Their structures, however, are rigid and if you wish to change a particular condition with regards to your fixed rate mortgage, you'll need your creditor's approval first.
Fixed rate mortgages are generally long, often allowing borrowers to pay off their loans in a span of 30 years. Some of them require you to make balloon payments in the end; in such cases, you can take advantage of low monthly payments yet be sure you have enough cash to pay off the remaining balance of your loan at the final payment date.
Adjustable Rate Mortgage
Also known as variable mortgage, an ARM has fluctuating interest rates. They're ideal if you wish to take advantage of the exceptionally low interest rates for a given period but you are also equally confident of your ability to pay off your loan even when the time comes that your loan's interest rate increases. There are different types of ARMs available today, including but not limited to buy down mortgage, graduated payment mortgage, two-step mortgage, and negatively amortizing loans.
Interest Only Loans
Interest only loans might have fixed or variable interest rates, but they are unique in the sense that they allow borrowers to pay only the interest for a specified period of time. If the allotted time expires however, the borrower will be given 3 choices: he can pay off the entire loan in 1 lump sum, refinance the loan, or proceed with a monthly installment plan which involves interest and part of the loan principal.
Conventional Loans
These are different from other kinds of mortgages primarily because of their source. Conventional loans are offered by well-established companies and they consequently adhere strictly to the guidelines set by the Federal National Mortgage Association.
The requirements they set for borrower are comparable to what you'd assume to conform with for bank loans: you need to offer evidence of your abilities for supplying the down payment for the loan as well as proof of your assets, submit income requirements, and establish your borrower credit.
To select the right refinance loan, keep in mind to quote the lowest mortgage refinance rates you've acquired with the current interest rate you're paying for your existing loan. You should not be afraid to ask questions!
by: Raul Hilario
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