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Refinancing is often used to lower your interest rate. If rates have dropped since you last financed your home, you may want to consider refinancing. Other common reasons to refinance include paying off a balloon payment, converting an adjustable rate loan to a fixed rate loan or to extract cash equity in your home (cash out). A few reasons for cashing out include: home improvement, an education fund, and consolidating debt.
Another way to convert equity in your home to cash is a “home equity” loan. A “home equity” loan is an alternative to refinancing if your home loan has a very low rate compared to current interest rates or if you have a prepayment penalty on your loan.
In order to refinance you will need a current appraisal, analysis and in many cases verification of your income and assets, as well as most of the same paperwork required when you originally financed your home. Adequate property insurance and new title insurance is necessary.
Refinancing with Superior Equity Lending can be a good idea if you:
* want to get out of a high interest rate loan to take advantage of lower rates. This is a good idea only if they intend to stay in the house long enough to make the additional fees worthwhile.
* have an adjustable-rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
* want to convert to an ARM with a lower interest rate or more protective features (such as a better rate and payment caps) than the ARM they currently have.
* want to build up equity more quickly by converting to a loan with a shorter term.
* want to draw on the equity built up in their house to get cash for a major purchase or for their children's education.
Should You Refinance Your ARM?
In deciding whether to refinance an ARM you should consider these questions:
* Is the next interest rate adjustment on your existing loan likely to increase your monthly payments substantially? Will the new interest rate be two or three percentage points higher than the prevailing rates being offered for either fixed-rate loans or other ARMs?
* If the current mortgage sets a cap on your monthly payments, are those payments large enough to pay off your loan by the end of the original term? Will refinancing to a new ARM or a fixed-rate loan enable you to pay your loan in full by the end of the term?
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Superior Equity Lending
