To refinance your loan in order to obtain a lower interest rate and start saving on your monthly payments, a mortgage lender may offer you the following loan products with the security of fixed-rate payments:
15 and 20-Year Fixed-Rate Refinances
Choose either one of these if:
- You want a shorter loan life and lower rates;
- Low monthly payments are not a priority; and/or
- You're planning to stay in your house for more than 10 years - especially if you're planning to completely pay off your loan.
25 and 30-Year Fixed-Rate Refinances
Choose either one of these if:
- You want low monthly payments that do not change;
- You want a loan that's generally easier to qualify for;
- You're planning to remain in your house less than 10 years; and/or
- You want the maximum tax advantage (please consult your tax adviser).
When refinancing, there are two loan options you should also consider:
No-Closing Cost Option:
This option allows you to refinance with few upfront fees. While the rate is slightly higher, you will pay few upfront fees* to get your new loan. In effect, as long as our roll-down rate is lower than your existing rate, it makes financial sense to refinance because there is little or no cost in doing so.
Cash-Out Option:
If your equity in your property qualifies, you can refinance with a loan amount greater than your current mortgage - and keep the difference! Use it for home improvement, debt consolidation, or whatever you want.
*A "roll-down" loan is one that the lender pays all non-recurring closing costs for the borrower. The borrower is still responsible for paying all prepaid interest, property taxes, and hazard insurance, as well as all other recurring items. Minimum loan amount for the roll-down is $150,000. Closing costs assume that the borrower will escrow monthly property tax and insurance payments.