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Mortgage and Payment Options

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If you are considering refinancing your home or purchasing a new one you need to look at your short and long term goals to determine which mortgage and payment options will best fit your needs. Why is this important?

If you are looking at living in your home for a long period of time, you should consider a mortgage payment that is conducive to a long term plan. Often those homeowners refinancing their homes will seek a more conservative mortgage program with a steady interest rate and mortgage payment such as a 30 year fixed rate mortgage or a long term ARM (adjustable rate mortgage). Those refinancing their homes for a short term goal (let’s fix this puppy up and sell it) may benefit from a mortgage loan program that offers a lower mortgage payment for the time the homeowner needs to accomplish their goals. Option ARMS and short term ARMS that offer interest only options may be the best mortgage programs and payments for them. However, some of the more risky short term loan options can come with a higher cost and pre-payment penalties so make sure you check your Good Faith Estimate and Truth-in-Lending Disclosure to make sure your loan fits your needs.

Remember, whichever option you choose to meet your goals should be well thought out. Refinancing your home comes with a cost. Making the right decision the first time can help you save you money not only on your monthly mortgage payment but on refinance closing costs and rates as well.