Today’s Current Refinance Rates – Mortgage Refinancing Rates

Mortgage Refinancing: What Is the Best Option for You?

In today’s economy, homeowners are trying to find every way that they can to make their bills affordable. People looking to purchase their first home are going to find some of the lowest rates available, while existing homeowners will be enticed to learn more about the new lower rates that everyone is talking about. While hearing about these incredibly low rates, it’s important to know the basics of each type of loan available so you can make an informed decision for you and your family.
It’s important that all homeowners and potential homeowners understand the long term ramifications of a mortgage. There are a wide variety of choices when it comes to taking out a mortgage and knowing the long term effects will help them be the most successful in the future. While a higher payment right now might be affordable, homeowners have to think about the long term and what could possibly happen. While no one is a fortune teller and can’t predict what your finances will look like in the future, obtaining a sensible mortgage now will make things easier in the long run.

There are several types of mortgages to choose from when purchasing a home or refinancing. These loans include 30-year fixed rate loans, 15-year and 10-year fixed rate loans as well as variable rate loans. The most common and the safest mortgage that homeowners can obtain is the 30-year fixed term mortgage. The payment of the 30-year fixed term mortgage will remain the same for the life of the loan as will the interest rate that you pay for this mortgage. The difference between a 30-year mortgage and a 10 or 15-year mortgage is the amount of the mortgage payment. When you spread a mortgage out over 10 years rather than 30 years, it will result in a higher monthly payment, even though the interest rate is lower. Variable rate mortgages on the other hand do exactly what they say; the rate varies. This variance could take place every 6 months or yearly depending on the type of adjustable rate mortgage or ARM you qualify for. Regardless of when your rate changes, this is a much riskier loan for any borrowers to take. Fixed interest rates are extremely low right now, which means that the only way for future rates to go is up. There’s no way to predict how much they will increase or how it will affect your payment until right before your new payment is due. A higher payment could prove to be a struggle for homeowners, which is why an ARM mortgages are not a wise choice for most people.

The 30-year fixed term mortgage is one of the safest mortgages for borrowers. This type of mortgage allows borrowers one of the lowest payments available throughout the term of their loan as well as offering budgeting power that will never change. There is power in the knowledge of knowing exactly what your mortgage payment is going to be month after month. When your income situation changes whether voluntarily or involuntarily, you’ll be able to budget for your mortgage and know where you stand.
A 10 or 15-year fixed term mortgage might seem like an enticing choice because you will have your mortgage paid off in a short amount of time. What borrowers don’t realize is that a payment that comes along with a 10 or 15 year mortgage is a heavier burden to bear, especially in the case of job loss or even reduced hours. The payment is still fixed with these types of loans, but the higher payment means more stress on homeowners. What might seem even safer than a 30-year fixed rate mortgage is a 40-year term mortgage. While this term offers an even lower payment than the 30-year fixed mortgage, it’s not the smartest loan. Typical first time home buyers are in their mid to late twenties, which would make them retirement age before their 40 year mortgage has matured. Retirement income isn’t typically enough to cover a mortgage payment as well as all of the other living expenses that are necessary. A 40-year mortgage would put a burden on homeowners both financially and physically because they wouldn’t be able to retire as early due to their mortgage requirements.

There’s a reason the 30-year fixed rate mortgage is the most common and highly sought after loan for most homeowner’s. It’s the safest loan for homeowners to take, as there is no guesswork involved in what payments will be month after month and the interest rate will always remain the same. Even borrowers that are tempted to take out a shorter term mortgage in order to have their mortgage paid off quicker will benefit from a 30-year mortgage. Since a 30-year mortgage offers safety with a lower payment, when times are good borrowers always have the option of paying more than their required payment, which automatically goes to lower their principal. This will give all homeowners a payment that they are comfortable with and still leave them with the option to pay their mortgage quicker.