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Changing the Terms of your loan; that phrase alone may seem like an overwhelming & daunting process to many homeowners, but it doesn’t have to be. There are many ways to change the terms of your loan, it all depends on what you would like to accomplish. We’ll walk you through some different goals & ways to achieve those below.
If you are looking to pay off your mortgage faster, shortening your loan terms may be the right fit for you. While your monthly payment would go up, you would be paying less money over the life of your loan and owning your home in half of the time. One more plus would be that most lenders usually offer lower rates for the 10 or 15 years that you would have your mortgage. Before deciding if a shorter term loan is the right option for you, ask yourself: “Can I afford a higher monthly payment?” If your answer is a yes, then a 10 or 15 year mortgage may be your best bet.
Perhaps when you bought your home you hadn’t planned to stay as long as you are or you bought it with an ARM with the intention of refinancing out of it before it ballooned. If this describes your scenario then lengthening your loan terms may be a good option. By spreading out and locking in your rate you are guaranteeing yourself the security of a fixed, low monthly payment. With a typical 30 year fixed, you give yourself the freedom to make extra payments or to add slightly to your normal monthly payment. This will allow you to build equity in your home much faster than your set repayment period. With ever changing rates you are always protected. However, if rates drop significantly you always have the chance to refinance into an even lower fixed rate.
Lastly, a loan scenario that scares most people, but can be the best bet for most is refinancing into an Adjustable Rate Mortgage (ARM). If you know that you only plan on being in your home for a few years you can use a 5-1 ARM to have a low fixed rate for 5 years, then either refinance or sell before it starts rising the following year.
With all these different loan options & loan terms it can be quite intimidating to even entertain a refinance, but with the right amount of assistance and knowledge, it is an easy, smart & wise financial investment. Visit our website at www.geqfinance.com or call one of our loan specialists at (800)245-3279 to see what terms would be the best fit for you!