Homeowners in Tampa, Florida and across the U.S. hear the option of "refinancing" their mortgage on a daily basis. On T.V, in the mail, from friends...but what does it really mean? As a local mortgage expert, I will break down the three main mortgage refinancing options. (There are hundreds of loan programs that fall under each category. Contact your local mortgage professional to find out what options are available for you.)
Option #1 - Rate and Term Refinance
- With a rate and term mortgage refinance, you will reduce your rate or your term and possibly reduce your monthly payment.
- With this option, you should consult with your mortgage professional about the new term of your mortgage versus how many years you have remaining on your current mortgage.
- This option is also widely used when moving from an adjustable rate mortgage to a fixed rate mortgage.
Option #2 - Cash-Out Refinance
- This means taking out a new mortgage for more than the balance of your current mortgage.
- With a cash-out refinance, you can pull equity out of your home in the form of cash. Some homeowners use this option to consolidate debts, pay for home improvements or pay for other items.
Option #3 - Second Mortgage or Home Equity Line of Credit
- This is a new mortgage that will be added to your home, in addition to your current first mortgage.
- Most home equity accounts work line a credit card, where you have an access to the line limit and make interest-only payments for a specified period, although the line can be paid down at any time.
Which option is best for your financial situation? You should consult with your local mortgage professional and explore your options. Some items to consider in making your decision:
- What are your short and long term financial goals?
- What are your current mortgage rates?
- How much equity do you have in your home?
- How long do you plan to stay in your current home?
- What is the cost for your refinance?
A mortgage professional will be able to sit down with you and help evaluate your personal refinance options. If you are considering a refinance in Hillsborough, Pinellas or Pasco County, Florida, please email me at LRoss@AmeriFirst.com for a complimentary consultation.
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~View my original article at www.TampaBayMortgageBlog.com, Mortgage Refinancing | Different Options Explained
Leah Ross, Personal Mortgage Consultant
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