home mortgage – Blog | ʹapp /blog Excellence in Real Estate Since 1965 Tue, 20 Aug 2024 00:22:42 +0000 en-US hourly 1 https://wordpress.org/?v=6.2.6 How to Avoid Common Mortgage Pitfalls /blog/how-to-avoid-common-mortgage-pitfalls /blog/how-to-avoid-common-mortgage-pitfalls#respond Fri, 06 Sep 2024 00:00:00 +0000 /blog/?p=6439 Navigating the mortgage process can be challenging, whether you are buying your first home, refinancing, or planning to sell. Missteps along the way can lead to long-term financial stress or — in the worst-case scenario — pre-foreclosure. Explore the common mortgage pitfalls and learn how to avoid them, ensuring a smoother and less stressful experience. … Continue reading How to Avoid Common Mortgage Pitfalls →

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A man experiencing stress as a result of some common mortgage pitfalls.

Navigating the mortgage process can be challenging, whether you are buying your first home, refinancing, or planning to sell. Missteps along the way can lead to long-term financial stress or — in the worst-case scenario — pre-foreclosure. Explore the common mortgage pitfalls and learn how to avoid them, ensuring a smoother and less stressful experience.

Overextending Your Budget

One of the most common pitfalls is taking on a mortgage that stretches your budget too thin. Lenders may approve you for a higher loan than what is truly comfortable for your financial situation. Just because you are approved for a certain amount does not mean you should borrow it all.

How to Avoid It

Create a detailed budget including all your monthly expenses — utilities, groceries, transportation, and entertainment. Use a mortgage affordability calculator to determine a comfortable loan payment, factoring in taxes, insurance, and potential interest rate increases. Experts recommend that your housing expenses not income.

Ignoring the True Cost of Homeownership

Many first-time buyers focus solely on mortgage payments, forgetting about additional costs such as property taxes, homeowners insurance, maintenance, and repairs. These expenses can quickly add up, turning what seemed like an affordable loan into a financial burden.

How to Avoid It

Before committing to a mortgage, research the area’s property taxes and get quotes for homeowners insurance. Set aside funds for ongoing maintenance and unexpected repairs. A good rule of thumb is to budget purchase price annually for maintenance.

Choosing the Wrong Mortgage Type

Fixed-rate and adjustable-rate mortgages (ARMs) in the U.S., and each has its own benefits and drawbacks. However, selecting the wrong type based on your financial situation or future plans can lead to unexpected costs. For example, ARMs typically offer lower initial rates but can skyrocket after the fixed period, leading to higher payments.

How to Avoid It

Consider your long-term plans. A fixed-rate mortgage provides stability and predictability if you plan to stay in your home for many years. If you might move within a few years, an ARM might be more appropriate. Always review the loan terms carefully and consult a financial advisor to ensure they align with your financial goals.

Failing to Shop Around for the Best Rates

Many buyers settle for the first mortgage offer they receive, potentially missing better rates or terms. Even a slight difference in interest rates can lead to significant savings or costs over the life of the loan.

How to Avoid It

Shop around and compare rates from different lenders, including banks, credit unions, and online lenders. Do not be afraid to negotiate terms. Be sure to consider more than the interest rate, such as fees, points, and other loan terms.

Skipping Pre-Approval

House hunting without a mortgage pre-approval can lead to disappointment and wasted time. You might find your dream home, only to realize later that you cannot secure the necessary financing.

How to Avoid It

Get pre-approved before you start looking at homes. This step helps you understand how much you can afford and shows sellers you are a serious buyer. Pre-approval requires a credit check and verification of income and assets, so be prepared to provide documentation.

Overlooking the Importance of a Good Credit Score

Your credit score plays a significant role in determining your mortgage rate. A lower credit score can lead to higher interest rates, which can cost you thousands over the life of the loan.

How to Avoid It

Regularly check and monitor your credit score and take steps to improve it if necessary. Pay down debt, avoid opening new lines of credit, and ensure all bills are paid on time. If your credit score is not where it needs to be, consider delaying your home purchase until it improves.

Falling Behind on Payments

Failing to keep up with mortgage payments can lead to late fees, a damaged credit score, and — in severe cases — pre-foreclosure or foreclosure. In fact, foreclosure activity , indicating homeowners must be vigilant.

Pre-foreclosure occurs when a homeowner falls behind on mortgage payments, and the lender begins reclaiming the property by filing a notice of default. This situation can be both financially and emotionally devastating. However, it is essential to know pre-foreclosure is not the end — there are steps you can take to avoid this entirely.

How to Avoid It

As soon as you know you are in trouble, reach out to your lender. Many offer programs to help you catch up or temporarily reduce your payments. Refinancing might also be an option if your interest rate is too high or your payment is unmanageable.

This strategy and make it easier to stay current. Lastly, if keeping the home is not feasible, selling it before foreclosure can help you avoid the long-term impact on your credit.

Take Control of Your Mortgage Journey

Avoiding common mortgage pitfalls is crucial to maintaining your financial health and achieving long-term homeownership success. Understanding the risks and taking proactive steps ensures your housing loan works for you, not against you. Whether you are buying, refinancing, or managing your current mortgage, staying informed and prepared will help you navigate the process smoothly.

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]]> /blog/how-to-avoid-common-mortgage-pitfalls/feed 0 Understanding What Counts as Debt When Applying for a Mortgage /blog/understanding-what-counts-as-debt-when-applying-for-a-mortgage /blog/understanding-what-counts-as-debt-when-applying-for-a-mortgage#respond Fri, 05 Jul 2024 21:58:09 +0000 /blog/?p=6348 When you apply for a mortgage, your debt-to-income ratio (DTI) will play a vital role. The mortgage lenders will review your credit profile and check the DTI ratio to assess your affordability. So, the debt-to-income ratio will indicate how much debt you carry, such as credit card balances, payday loans, medical bills, personal loans, and … Continue reading Understanding What Counts as Debt When Applying for a Mortgage →

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A person calculating out her debt-to-income ratio.

When you apply for a mortgage, your debt-to-income ratio (DTI) will play a vital role. The mortgage lenders will review your credit profile and check the DTI ratio to assess your affordability. So, the debt-to-income ratio will indicate how much debt you carry, such as credit card balances, payday loans, medical bills, personal loans, and utility bills against your monthly income.

Most borrowers know how much their credit score is, which is essential to show their credit affordability. However, many of us need to learn that, like credit score, the debt-to-income ratio will also affect your mortgage loan or credit approval.

What is a mortgage loan?

When you take out a loan to buy your residential home, vacation home, or rental home, it will be called a mortgage.

  • Fixed-Rate Mortgage
  • Adjustable-Rate (ARM) Mortgage
  • Balloon Mortgage
  • Interest-Only Mortgage
  • Reverse Mortgage
  • Combination Mortgage
  • Government-Backed Mortgage
  • Second Mortgage

The mortgage interest rate depends on the lender and other factors such as your credit rating, earning levels, and, most importantly, the debt-to-income ratio. Now, let’s discuss how the debt-to-income ratio impacts your ability to get a mortgage.

Which ratio do mortgage lenders consider?

There are two types of debt-to-income ratios that most lenders accept while reviewing mortgage applications:

  1. The front-end ratio is also known as the housing ratio. It also covers monthly mortgage payments, homeowner’s insurance, real estate taxes, and other related costs.
  2. The back-end ratio will indicate how much of your income is required to pay your monthly debt burden. This may include your credit card bills, car loan installments, student loan payments, medical bills, child support, and other debts in your credit report. This ratio will also include your mortgage payments and other housing expenses.
  3. 35% or less – You have a decent ratio over your debts and maintain a manageable level.
  4. 36-49 %—You must improve your DTI ratio by reducing debt levels. This way, you may be able to handle unexpected expenses, such as an expensive car repair, home renovation work, or unanticipated medical costs.
  5. 50% or more – It is time to get serious! Your DTI ratio has crossed the standard limit and has entered the danger zone. You might need more funds for emergencies. Having such a debt-to-income will reduce your affordability to get a mortgage loan.

Take a Look at the Debt-to-Income ratio

As discussed in the introductory paragraph, the lender can assume the risk factor from the DTI ratio before providing a home loan to a borrower. If the borrower’s debt is too high, the borrower can default on the loan amount.

Usually, the lenders follow a rule that the borrower can have a home loan if the DTI ratio is a maximum of 43% of the particular borrower.

So, a borrower who needs a home loan should repay some debt first. This will help the borrower reduce the DTI (debt-to-income) ratio. Thus, the borrower can qualify for a home loan with a favorable interest rate.

Understand the credit utilization ratio.

Before approving a home loan, lenders check credit scores, which largely depend on the credit utilization ratio. The credit utilization ratio means you have utilized up to what percentage of your credit limit.

Your credit score will be low if you borrow closer to your limit. Thus, your chances of getting approved for a home loan with a favorable interest rate will be lower.

Paying off at least a portion of your credit card debt is a strategy you should adopt. It will help you lower your credit utilization ratio and get approved for a mortgage with a favorable interest rate.

Pay off credit card debt to manage your monthly income.

Remember that your income is limited. Manage your spending and card debt payments with this income. With the monthly mortgage loan payment, a new debt burden will be included in your income. Thus, if you pay off the credit card debts, you will have less debt payment on your shoulders.

Pay off your credit card debts before applying for a mortgage

When you apply for a home loan, the lender will check your credit score and DTI ratio. The interest rate of your home loan will depend on your credit score and the DTI ratio. The lower the lender will offer you an interest rate, the quicker you can pay off the principal balance.

Mortgage options for home buyers

A home buyer should calculate the mortgage loan amount that he or she will have to pay so that he or she may be able to repay the home loan within a definite period.

Fixed-rate mortgage

Fixed-rate mortgage loans are most common among first-time home buyers. A first-time buyer usually takes out this loan for 15 to 30 years. As such, even if the interest rate changes in the market, you will enjoy paying a fixed interest rate on your loan amount.

Adjustable-rate mortgage

This is common among home buyers who would like to pay less initially but agree to accept a change in mortgage payment in the future. This change in mortgage payment may either increase or decrease according to the variation in market interest rate. By choosing this type of mortgage loan, the home buyer will have to make a high mortgage payment in the future if, by chance, the interest rate rises suddenly.

Interest-only mortgage

With the help of an interest-only mortgage loan, you pay only the interest on the loan amount you’ve taken out for a specific period. During this period, you do not have to pay the principal amount. But once the interest-only period ends, your payment amount increases with the repayment of the principal amount. This loan is helpful for those people who earn money on a commission basis.

How to reduce your DTI (Debt-to-Income) ratio

Your high debt-to-income ratio may create issues when you apply for a home mortgage. The higher your DTI, the more likely you may face problems. The lender will only entertain your mortgage loan application if you take significant steps to lower it as soon as possible.

So, here are some steps that you may follow to reduce your DTI:

  • You might have to pay off your high-interest debts and the debts with the highest amount. You must , payday loans, student loans, or other outstanding debts. Increase the amount of your down payment every month to lower your total debt amount. If you have financial problems but still need to reduce your DTI, it will be wise to opt for debt settlement.
  • Your debt-to-income ratio is high just because you have too much debt on your shoulders. So, the easiest way to improve DTI is to cut off a big chunk of debt. You may pay off your current loans ahead of schedule, at least one or two. But before paying, know everything about pre-penalties.
  • Refinancing your existing loans at lower interest rates can be an outstanding move to lower your DTI. You must qualify for a lower interest rate and modify your repayment terms. Online lenders like SoFi and Earnest may offer you better interest rates. Once you can lower interest rates and reduce your monthly payments, your DTI ratio will gradually reduce.

Conclusion

Whether or not you can afford a home loan payment, your lender will come to know about it when they check your credit score and DTI ratio. When you show an impressive credit score and DTI ratio to your lender, chances are you can get a home loan with a favorable interest rate. Thus, paying off your credit card debt before applying for a mortgage is important.

Lyle Solomon

About the Author: Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998 and currently works for the in California as a principal attorney.

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]]> /blog/understanding-what-counts-as-debt-when-applying-for-a-mortgage/feed 0 Why It’s Best to Avoid the Long Road of a 50-Year Mortgage /blog/why-its-best-to-avoid-the-long-road-of-a-50-year-mortgage /blog/why-its-best-to-avoid-the-long-road-of-a-50-year-mortgage#respond Wed, 04 Jan 2023 21:37:04 +0000 /blog/?p=5734 The 50-year mortgage first appeared in southern California, where housing was becoming increasingly costly, and people were looking for new ways to reduce their monthly mortgage payments. Except for the extra two decades to pay off the loan, it works the same as a 30-year fixed mortgage. The advantage of a 50-year mortgage is the … Continue reading Why It’s Best to Avoid the Long Road of a 50-Year Mortgage →

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A document with mortgage details and a calculator implying consideration of a 50-year mortgage.

The 50-year mortgage first appeared in southern California, where housing was becoming increasingly costly, and people were looking for new ways to reduce their monthly mortgage payments. Except for the extra two decades to pay off the loan, it works the same as a 30-year fixed mortgage.

The advantage of a 50-year mortgage is the lower payment, but the significantly higher long-term costs may outweigh this advantage. Let’s see if you should go down that long road.

What’s the point of a 50-year mortgage?

Some 50-year mortgages have fixed rates. They are designed to be paid off with consistent payments over 50 years. Adjustable-rate mortgages (ARM) with a term of 50 years are also available. An ARM has a fixed rate for a set period, which can be adjusted regularly for the remainder of the loan term.

The most common reason people take out a 50-year mortgage is to lower their monthly payments. The idea is to spread the mortgage over a longer period so that you can pay less each month than you would with a shorter-term loan.

Your monthly payment will be higher if you use a 15 or 30-year mortgage. Monthly payments may be significantly reduced by extending the loan. A 50-year mortgage lowers your monthly payments, which allows you to borrow more money and buy a larger house than you can afford.

Fifty-year loans with an initial period of only paying interest may also provide more flexibility at the start of your loan term. This can be useful if you deal with the high costs of moving into, furnishing, or repairing a new home.

Disadvantages of 50-year mortgages

You can get a mortgage for as long as 50 years in the US, but these aren’t “qualified” mortgages. Only some lenders are interested in non-qualified mortgages, so your choices would be limited. But this isn’t even the first or second most significant disadvantage of 50-year mortgages.

First and foremost, the total amount of interest paid at the end of the term will be significantly more in the case of a 50-year mortgage. This results from the longer loan term and the higher interest rate combined. All of this leads to 50-year mortgages having a very high total cost compared to a 15 or 30-year mortgage.

Secondly, because the loan term is so long, you’ll accumulate equity at a slower rate with a 50-year mortgage. This can result in a longer-than-usual wait time if you want to refinance, get a home equity loan, or get rid of private mortgage insurance (PMI), all of which require you to meet minimum equity thresholds.

Fifty years in debt is a long time. Even if you buy a house when you are 25, you will only be able to pay it off once you are 75. It will take you a half-century to own the home, and you will also be paying interest on top of the principal amount during this time.

Alternatives to getting a 50-year mortgage

Budgeting is the most effective way to increase your spending power on things that truly matter. Make a monthly budget and eliminate a few luxuries to allow for a 30-year or even a 15-year mortgage. Using the budget correctly will ensure you will avoid having to go into debt for the next 50 years.

An emergency fund is also required because it will cover your expenses in an unexpected financial crisis. Save enough money to last at least a couple of months in case of job loss or injury that prevents you from working. An emergency fund will also help you stay out of debt by providing cash in times of need rather than relying on your credit card or a personal loan.

Managing your debt will also help you keep your monthly expenses low, allowing you to afford a faster and less expensive (in total) mortgage. If you have numerous insecure debts, consider into a single, more manageable monthly payment. Dealing with all your debts will give you room in your budget for a quicker and overall cheaper mortgage.

Your other options to reduce mortgage payments include the following:

  • Saving for a larger down payment.
  • Using an adjustable-rate mortgage.
  • An interest-only mortgage.
  • Buying a less expensive home.

The Bottom Line

Fifty-year mortgages are not new or groundbreaking, and there is a reason why they are not popular. Although they can be helpful for some people looking to buy a house in an expensive housing market, for most of us, it is best avoided.

The lower payments of a 50-year mortgage fail to outweigh its cons. To own a house, you don’t have to go into debt for the next 50 years. There are plenty of ways to take your existing financial situation to a place where you can easily afford a traditional 15 or 30-year mortgage.

About the Author: Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998 and currently works for the in California as a principal attorney.

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]]> /blog/why-its-best-to-avoid-the-long-road-of-a-50-year-mortgage/feed 0 RESPA- What Should You Know Before Buying a House? /blog/respa-what-should-you-know-before-buying-a-house /blog/respa-what-should-you-know-before-buying-a-house#respond Sat, 13 Aug 2022 16:00:39 +0000 /blog/?p=5610 The Real Estate Settlement Procedures Act (RESPA) was enacted in 1975. The federal statute was introduced to stop malpractice and restrict the usage of escrow accounts in the real estate settlement process. Who regulates RESPA? Once RESPA became effective in 1975, it was under the U.S. Department of Housing & Urban Development (HUD) jurisdiction. Ever … Continue reading RESPA- What Should You Know Before Buying a House? →

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A blue book with "RESPA" on the cover.

The Real Estate Settlement Procedures Act (RESPA) was enacted in 1975. The federal statute was introduced to stop malpractice and restrict the usage of escrow accounts in the real estate settlement process.

Who regulates RESPA?

Once RESPA became effective in 1975, it was under the jurisdiction. Ever since its inception, the Act has undergone several amendments and changes. However, after 2011, the Consumer Financial Protection Bureau monitored RESPA due to the Dodd-Frank Wall Street Reform and Consumer Protection legislation.

What is the objective of RESPA?

The primary objective of this federal statute is to make consumers aware of settlement costs and eradicate referral fees that increase mortgage costs.

RESPA- Key features

1. The seller and the buyer will get complete settlement cost disclosures.

2. The Act applies to all kinds of home loans like:

●   Property improvement loans

●   Refinance loans

●   Equity line of credit

●   Purchase loan

●    Reverse mortgage

3. Home loan servicers, mortgage lenders, and brokers have to provide the following disclosures to the home buyers:

●   Consumer protection laws

●   Real estate transactions

●    Settlement services

4. Loan servicers cannot demand massive escrow accounts.

5. Sellers cannot endorse or instruct title insurance companies.

6. Any kickbacks and referral fees are prohibited.

7. The servicer of the loan should itemize the charges a borrower has to pay and report the total amount paid from the escrow account.

8. If there is any violation of the RESPA laws during the settlement process, the plaintiff can file a lawsuit within a year.

What kind of information should you get from the mortgage lender?

  • RESPA mandates mortgage brokers, lenders, and services to provide all the information about the real estate transaction to borrowers. They must tell borrowers how much they need to pay for the total settlement service charges.
  • Lenders must provide the borrowers with a disclosure (known as the Good Faith Estimate). They have to list a variety of charges here.
  • The disclosure should contain a summary of the loan, contact details of the lender, important dates, escrow account information, settlement charges, and so on.
  • The lender must disclose to the borrower within three business days. However, if the application is rejected or the borrower withdraws it, the lender does not have to provide a good faith estimate.
  • Mortgage lenders cannot charge any fee to the borrower for providing the good faith estimate. If they charge a fee, it shouldn’t be more than what consumers pay for a credit report.
  • Mortgage lenders must provide an affiliated business arrangement disclosure when they refer you to an affiliate for settlement service.
  • If there is a business relationship between third parties involved in the settlement process, that has to be mentioned to the borrower.
  • Servicers of the loans should maintain a proper procedure to contact the borrowers.
  • The servicer must analyze the escrow account annually to determine if there is a surplus or deficit.
  • If there is any deficit in the account, the servicer should inform the borrower.

What should the borrower do if lenders violate RESPA?

Borrowers can file a lawsuit against mortgage lenders for RESPA violations within a year of committing the act. If there is any improper behavior during the settlement process, borrowers can take the following steps:

●   Send a written letter to the loan servicer. Explain your problem in detail.

●   According to the law, the servicer must reply within 20 days of receiving your letter.

●   The servicer must resolve your issue within 60 business days of receiving your complaint. If the servicer feels there is no discrepancy, they have to give you valid reasons.

●   Continue making monthly payments to the servicer until the issue is resolved.

●   If the servicer does not take any step to resolve the issue, you can file a lawsuit against them.

●     Check if there is a federal district court where the property is located or if the dispute has occurred. If you find one, you can file a lawsuit there.

Conclusion

RESPA has been a boon in disguise for consumers and has curbed malpractices in the mortgage industry to some extent. It would be good if the federal government introduced something like this to reduce fraudulent practices in the payday loan debt settlement industry. Many people are getting scammed yearly due to the lack of stringent laws.

Finally, the law does not mandate that you consult a lawyer during the real estate settlement process. If you find malpractice, it is best to consult a lawyer ASAP. The lawyer knows the nitty-gritty of RESPA, and you can expect to navigate the legal process smoothly.

About the Author: Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998 and currently works for the in California as a principal attorney.

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]]> /blog/respa-what-should-you-know-before-buying-a-house/feed 0 Monitoring the Latest Mortgage Rates /blog/monitoring-the-latest-mortgage-rates /blog/monitoring-the-latest-mortgage-rates#respond Sat, 31 Jul 2021 00:00:11 +0000 /blog/?p=5085 Mortgage rates have been at their historic lows since the pandemic started last year and many have taken advantage of this to buy a home. Will the rates keep going down or will they go back up? This is one of the most frequent questions. People want to buy at the moment but in some … Continue reading Monitoring the Latest Mortgage Rates →

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calculator for determining your monthly payment with the current mortgage rate

Mortgage rates have been at their historic lows since the pandemic started last year and many have taken advantage of this to buy a home. Will the rates keep going down or will they go back up? This is one of the most frequent questions. People want to buy at the moment but in some parts of the country, there is a shortage of homes. As we all know, there are many factors that go into the performance of the real estate market which impacts the supply & demand. 

Whether you’re buying a property now or at a later time, checking the latest  can help you to make the best decision for yourself and your family. In addition, you can plan and estimate how rates can impact your budget (when it comes to the monthly payment) with a . Being prepared and equipped with the correct information can save you time and money when the time comes to buy your home.

Visit Money.com and speak to your local real estate agent and mortgage lender for more information.

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]]> /blog/monitoring-the-latest-mortgage-rates/feed 0 When Should I Refinance My Mortgage? /blog/when-should-i-refinance-my-mortgage /blog/when-should-i-refinance-my-mortgage#respond Wed, 14 Nov 2018 19:32:15 +0000 /blog/?p=3092 Refinancing your mortgage could be a smart financial move. It largely depends on timing. But how do you know when the time is right for you to refinance? First: Do you plan to own the home much longer? Refinancing your loan doesn’t happen without a few fees. The good news is that most of these … Continue reading When Should I Refinance My Mortgage? →

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Refinancing your mortgage could be a smart financial move. It largely depends on timing.

But how do you know when the time is right for you to refinance?

First: Do you plan to own the home much longer?

Refinancing your loan doesn’t happen without a few fees. The good news is that most of these fees will simply be rolled into your new loan, so you won’t need to pay a lump sum out of pocket.

But if you’re planning to sell the home in a few years, you may not hold the mortgage long enough to recover these fees. Refinancing really only makes sense if you plan to own the home for the next several years.

Assuming that you plan to own the home for a while, refinancing your mortgage can save you a lot of money in the long-term. It could also lower your monthly payment. And it could even help you tap into your home equity to finance another project.

Here are three key times when you should strongly consider refinancing your mortgage.

1. When you can reduce your interest rate by 1% or more

If you’ve held your current mortgage since before the 2009 recession, your interest rate is probably much higher than today’s rates. And you’re probably paying way too much in interest.

Refinancing to get today’s lower interest rates could reduce your monthly payments and save you a fortune over the term of your loan.

Additionally, if your credit score has improved substantially since you applied for your current loan, you may qualify for a lower rate now than you could at that time.

Generally speaking, if you can reduce your interest rate by 1% or more, it is probably a good time to refinance. That 1% makes sure you’re saving enough money to recover the previously mentioned fees.

2. When it makes sense to change your ARM for a conventional mortgage

Interest rates are on the rise. If you currently have an ARM (Adjustable Rate Mortgage), your mortgage rate will be increasing as well.

To lock in today’s low rates, you can refinance to a traditional mortgage with a fixed rate. Fixed rates are often slightly higher than ARM rates, but they come with the assurance that your mortgage interest rate will not rise with the national interest rate increases.

If you currently have an ARM, seriously consider refinancing to a fixed rate mortgage before interest rates get much higher.

3. When you want to use your home equity

Do you have a fair amount of equity in your home? You may be able to use your home equity to finance other projects.

This is riskier than refinancing for a lower (or fixed) interest rate because this involves taking on additional debt, with your home as the collateral. But if you need funds for something like starting your own business or paying off high-interest debts, your equity could provide the funding you need.

Mortgage interest rates are on the rise, but they’re still low. If you can lower your interest rate, lock in a long-term low rate, or take advantage of your home equity, act quickly to refinance your mortgage before rates increase.

This post is intended for informational purposes only and should not be taken as professional advice. The point of view and opinions expressed in this post are those of the author and do not necessarily reflect the position of ʹapp International. This post was written by Michelle Clardie. Michelle is a professional real estate blogger, specializing in ghostwriting Realtor® blogs. Her engaging content helps real estate agents become more visible online, generate more qualified leads, and increase their revenues. You can learn more at www.michelleclardie.com. 

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