| Part 1: What do those terms mean?
Are you getting ready to buy a new home or refinance your existing home? When you meet with your lender or speak with a real estate agent, you'll find they have specific terms or words they use. To avoid any confusion, if you don't understand what they are talking about, ask them. Here are some of the most frequently used terms and words you are likely to hear during this process. Adjustable-rate mortgage (ARM): A mortgage with an interest rate that changes periodically according to an index that is selected when the mortgage is issued. The initial interest rate is lower than that of fixed-rate mortgages, but monthly payments can increase or decrease when the rate is adjusted. .
Refinancing Your Mortgage 101
Editors Note: There are several things you should consider before you refinance your home. Here is an article concerning this subject: Practically everyone has refinanced or thought about it at one point in time. We've seen the dozens of commercials that urge us to do it. With rates at record lows over the past few years, refinancing has helped many borrowers lower their monthly payments. Refinancing your mortgage can be a very hard and confusing experience. When you're making your decision, there are several things to keep in mind. First, even a small rate cut can pay off quickly. Second, if you are planning to stay in your home for at least three to five years, it may make sense to pay "points" (a point equals 1% of the loan amount) and closing costs to get the lowest available rate.
Weigh options before refinancing
A few years ago, the housing market was booming. Now that it's slowed, homeowners and lenders are realizing they're in a pickle. Bankruptcy and foreclosures are happening left and right. Do you have an adjustable-rate mortgage you're looking to get out of? Wanting to tap into your equity to fix up the house?
To protect your home investment, now may or may not be the time to refinance. There are more options than when your parents bought their first home. What type of mortgage is best for your situation?
A home is a great investment. A mortgage can be the start of a great savings account. Before deciding on a mortgage, look at your options to see what best fits you, not only now but in the long run. Talk to several qualified lenders to help find the best fit.
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