Thinking of Refinancing Your Colorado Home Mortgage?

Why should I refinance?

 If you are a homeowner, then you already know the value of your house, but refinancing is a way to access some of the accrued home equity, and or a way to make living in your home less expensive. Refinancing is ideal for candidates who want to lower their monthly payments, liquidate some of the equity on your existing mortgage, or to readjust the terms of paying of your mortgage.

What are my conventional refinancing options?

 The best thing to do is to consult a Mortgage Broker like Colorado Lenders, Inc. A mortgage broker would be helpful in determining exactly what would be most suitable solution for your plans. One option you might consider would be to adjust the length of your mortgage to make it either shorter or longer. Making the term shorter is ideal if you can couple it with low interest rates because you will be paying a higher monthly amount, but less money in the long-term. Another option is to make the mortgage term longer so that you pay less per month over a longer period of time.

Screen-Shot-2015-07-31Based solely on $250,000 loan over 15 years with an interest rate of 5.5% and 0 money down

Screen-Shot-2015-07-31-2Based solely on $250,000 loan over 20 years with an interest rate of 5.5% and 0 money down

Screen-Shot-2015-07-31-3Based solely on $250,000 loan over 30 years with an interest rate of 5.5% and 0 money down

Are you or were you a part of the military? If so, you may have bought your home using a VA loan. If that is the case, an IRRRL (Interest Rate Reduction Refinancing Loan) might be the best option for you. It allows mortgage brokers to restructure your mortgage at a lower rate so that the buyer has lower monthly payments.

While refinancing, a mortgage broker can also help buyers restructure rate terms where they can change your terms from a fixed rate to an ARM, an ARM to a fixed rate, or structuring so that you can get better rates on your existing ARM or fixed rate mortgage. All of these are in attempt to save you money monthly and in the long-term.

Screen-Shot-2015-07-31-4Based solely on $250,000 loan over 20 years with an interest rate of 5.5% and 0 money down

Screen-Shot-2015-07-31-5Based solely on $250,000 loan over 20 years with an interest rate of 3.75% and 0 money down

 

How do I get cash from my house’s value?

There are three conventional methods of refinancing your mortgage in order to obtain cash from the equity accrued over time.   One popular way to do this is through a HELOC (Home Equity Line of Credit). This is a way for homeowners to access up to as much cash as their credit allows. This is practical as one usually only has to pay off the interest on the amount taken out – which is usually set at a low rate and gets adjusted monthly – until an individual is prepared to start paying the principle amounts as well (principle must be paid 10 years after HELOC into an amortized 20 year loan, so it is advisable to pay off principle as so as possible).

If you are a person who likes the security of knowing the interest rate of their payments, perhaps an Equity Loan is the option for you. They feature slightly higher rates than the HELOC, however monthly payments are made in one lump sum of the principle and the interest from the cash received.

The other popular option would be to simply do a Cash-out Refinance. This is ideal for those who have built up more equity than the amount that is due on the home. With this option you can get a second mortgage at a higher value, and receive cash for the difference of the two loan amounts. Since you for borrowing more than you originally were with the one mortgage, the monthly payments on your mortgage will be greater than they originally were, but we the added benefit of having cash from your home equity.

So which refinancing option is best for me?

 Given the shear volume of options in refinancing contacting a mortgage broker, banker or lender would be the best course of action in answering this question. However, keep in mind that refinancing could do more detriment to your financial well being than good based upon your given situation. One example of this could be if you have been under your first mortgage for a long period of time and you are close to paying off your home completely; you could be paying more to refinance than you would if you kept your original mortgage. Any refinancing servicer can sit down with you to discuss if you are a good candidate for a mortgage refinanc