With mortgage rates on the lower side, the choice to cash in and refinance your mortgage may be tempting, but before you make that decision here are a few facts to help you decide if it is the best financial choice for you and your family. Whether it is just to reduce the amount of interest you pay, or freeing up some income for other items or debts, there are several considerations to take into account. Here are the more popular options for refinancing your mortgage.
Fixed Rate Mortgages
If you like the stability of a fixed rate loan because of your budget can't handle unexpected fluctuation, then now might be a great time to choose this option. With fixed rates lower than they have been in some time, this may save you money by either reducing your monthly payments or, if you keep your payment the same, reducing the principal on your loan.
Adjustable Rate Mortgages (ARMs)
If you're planning to stay in a home for only a few years, or your income can handle changing monthly payments, then you can get an ARM for significantly less than a fixed rate mortgage. Adjustable rate mortgages are also popular with people who may have difficulty qualifying for a loan at a higher fixed interest rate, as it lowers the monthly payment.
Home Equity Loans
When interest rates are low, it is a good time to take out a home equity loan. This may allow you to keep your home if you are facing financial problems. It is also a great way to finance home improvements.
No matter what decision you make concerning the mortgage on your home, keeping your options open, arming yourself with up-to-date knowledge on the markets, and seeking the advice of professionals will keep your investment safe.