Changing From Fixed-Rate To Adjustable Rate
Interest rates influence the fees homeowners pay monthly. There are two kinds of interest rates used in mortgages: fixed-rate and adjustable rate. When the rates are low, the adjustable rate mortgages are the most desirable. Meanwhile, if the interest rates are high, fixed-rates can be more ideal option.
So if the homeowner has applied for fixed-rate loan and the interest rate have suddenly went down, changing from mortgage fixed-rate to adjustable rate is the best option. This will give him the freedom to use the lower interest rate as an advantage that would result to lower monthly fees.
Option To Shorten The Length Of Mortgage
Mortgage refinance would allow homeowners to change the length of mortgage. For instance: A homeowner is on the 7th year of payment on a 30-year term, with mortgage refinance, he can switch to shorter terms and opt either for 10, 15, or 20 years.
This will give him thousands of dollars of savings on the interest rate. He can also increase the value of his equity as he pays more on the principal rather than the interest.
Extra Cash
Using refinancing, a homeowner can access extra cash through the equity he has built. This is helpful in remodeling the house or paying for other things.
With the proper knowledge on how to use the house as a source of money, any homeowner can benefit with the mortgage they once thought to be “buying a home now and think of the monthly payments later.
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