Refinance 101: What Are The Differences in the Refinance options?

INTRO

Have you wondered what the difference between all the refinance options are? This report will break them down for you, so you can see which would work best for you.

Basics

With interest rates at record lows and home values in Las Vegas increasing, there has been a lot of talk about how right now is the best time to refinance. You have probably heard ads for  refinancing with terms like "Cash-Out" or  government programs like HARP or HAMP to help refinance underwater homes to a lower rate. Depending on your situation or what you are looking to do with a refinance this report will help you understand the difference so you can figure out which one is right for you.

Refinancing Your Loan– When you refinance you basically obtain a new loan to pay off an existing one. The main purpose to refinance your loan is to get a lower interest rate or monthly payment, which means you spend less money each month on your mortgage. With interest rates at record lows, there is a big chance the rate you are paying is higher than today's rates. Because of that, many people are refinancing and lowering their house payment or even going from a 30 year loan to 15 or 10 years and saving thousands of dollars.

If you are looking to take advantage of historic low rates to save money or pay your home off sonner, here are a few options:

  • 15-year refinance loans. Fifteen-year refinance loans are a popular option if you’ve paid off part of your existing mortgage and don't want to restart the clock on a new 30-year refinance loan. Fifteen-year refinance loans generally offer a lower interest rate, but have a higher monthly payment than 30-year refinance loans.  However, with rates much lower than they have been in the past, many people can refinance to a 15 year loan and keep the same or a similar house payment while shaving years off their mortgage thereby saving tens of thousands of dollars

 

  • 30-year refinances loans. Refinance loans with a new 30-year term may be a good choice for you if you have an adjustable rate and want to lock in a fixed interest rate.  They are also a great option to lower your monthly house payment.  Currently many home owners are saving $200-$600 per month.

One of our Loan officers would be delighted to compare 15 and 30 year options side by side for you.

Cash-Out Refinance– If your home is worth more than you owe on the existing mortgage you can use a cash-out refinance loan to gain access to extra cash. Since provperty values have risen in Las Vegas area more than 35% in the past year, many people can use this option now who couldn't a year ago.

For example if you owe $80,000 on a home valued at $200,000 it has $120,000 in equity. You can take out a chunk of that $120,000 in cash to pay off other debt or make new purchases.

If you need the extra cash to pay off debts, pay for home improvement projects, a child’s college, or even a vacation a cash out refinance is for you.

HARP Refinance-The Home Affordable Refinance Program or HARP 2.0 is a Governement program started in 2009 that can help you refinance if a traditional refinance hasn’t worked for you because your mortgage  is under water or "upside down".  To qualify for HARP your payment has to have been made on time for each of the last 12 months. Th HARP program has been created so more people can take advantage of historic low rates and lower their monthly payments.

Contact us today and we can figure out which refinance program will work best for you.