| If you are interested in paying less money | | | | 30-year fixed-rate mortgage when you are not |
| for your mortgage, you are probably trying to | | | | going to be in the home that long. Doing so |
| lower your mortgage payment. There are a few | | | | may be costing you money. |
| different ways you can lower your monthly | | | | |
| mortgage payment. You can change the term of | | | | Consider refinancing to an ARM instead. You |
| your mortgage. Since the balance of your | | | | will get a lower rate as well as lowering |
| mortgage is spread out over a longer period | | | | your monthly mortgage. You also have to think |
| of time, your payment is lower. | | | | about the fact that if you are only going to |
| | | | be in your home for a few more years, it may |
| If you have a thirty year mortgage and one of | | | | make sense not to refinance out of your ARM. |
| your financial goals is long-term savings, | | | | The equity you have in your home can act like |
| you may want to consider shortening your term | | | | a savings account that you could access |
| to twenty or even fifteen years. Your payment | | | | through a home equity loan or a cash-out |
| will be higher, but you will pay much less in | | | | refinance. |
| interest over the life of the loan, saving | | | | |
| you thousands of dollars in the long run. In | | | | This is usually done when you want to finance |
| addition, you can lower your payment by | | | | an important home improvement, pay for |
| refinancing an interest-only loan. | | | | college or pay off high-interest credit card |
| | | | debt. Whatever your reason, this may be the |
| With an interest-only loan, the minimum | | | | right option for you. |
| amount you are required to pay is the amount | | | | |
| of interest for a certain period of time, | | | | The interest you pay on a credit card is not |
| though you can pay as much principal as you | | | | tax-deductible and you pay a higher rate than |
| like. One helpful too is the refinance | | | | you would on your mortgage. Consequently, |
| calculator that will allow you to see how you | | | | credit card debt is often referred to as bad |
| could lower your monthly mortgage payment. | | | | debt whereas your mortgage is considered good |
| Keep in mind that it is important to consider | | | | debt. Using your home equity to pay off your |
| what mortgage rates are doing. Since | | | | high-interest credit card debt can save you |
| mid-2004, the Federal Reserve has raised | | | | money in the long run. |
| interest rates several times and is expected | | | | |
| to keep raising rates in the near future. | | | | Using your home equity, rather than your |
| | | | credit cards, to finance expensive purchases |
| This means that if you have an adjustable | | | | can also be a smart move. |
| rate mortgage, it may adjust to a rate that's | | | | |
| higher than a fixed-rate mortgage. You should | | | | Deciding on when to refinance your mortgage |
| consider refinancing to a fixed-rate loan. | | | | will depend on the circumstances of your |
| Additionally, you need to consider how long | | | | situation: how long you'll be in the home, |
| you plan on being in your home. Many people | | | | what your financial goals are, whether |
| move within nine years so it may not make | | | | interest rates are dropping, and so on. |
| sense to pay a higher interest rate for a | | | | |