Long-term Savings with Rate and Term Refinance
Rate and term refinance is a term used to describe several wide-ranging types of refinancing solutions that share a single function: to change the interest rate and/or terms of a loan, without changing its value. Rate and term refinancing is a popular option for clients who want to take advantage of better interest rates in a market shift, or who want to pay off a loan at a slower or faster pace than normal.
In this week’s blog from Associates Home Loan of Florida, Inc., we’ll talk about the basics of rate-and-term finance and go further into likely candidates for this mortgage solution. Contact us if you’re interested in refinancing a home in Orlando, Tampa, Sarasota, or nearby Florida.
Rate, Term, or Both?
Mortgage interest rates fluctuate according to economic indicators, government policy, developments in the real-estate industry, and other factors. When interest rates drop, many smart homeowners consider rate and term refinancing to secure a lower rate. While borrowers still have the same balance to pay, they may be able to finish paying off the mortgage faster.
Clients who refinance for different terms do so to lengthen or shorten their terms. Borrowers who come into extra money may choose to refinance to a shorter term to pay off a home faster. Others would like a lower monthly payment and choose to switch out their mortgages for those with longer terms.
Who’s a Candidate for Rate and Term Refinance?
One of the most common types of rate and term refinance clients we see are those who wish to escape their existing adjustable-rate mortgage (ARM) and switch to a fixed-rate mortgage. ARMs have a consistent interest rate for a period, then raise periodically on a predetermined schedule. Refinancing with rate-and-term can ensure clients have a fixed rate with consistent, unchanging payments.
Another common rate and term refinance candidate is a person who has worked over recent years to improve his or her credit rating and financial standing in the hopes of securing a lower mortgage interest rate. Some of these borrowers previously had FHA or USDA loans and are refinancing to a conventional loan with a more competitive interest rate.
Large financial changes or changes in family status, such as a marriage, death, the birth of a child, or the addition of a college tuition, can also inspire a desire to refinance to a longer or shorter term.
When you sign up for a rate and term refinance, while you won’t exchange any cash to change the value of the mortgage, you will be responsible for closing costs. You may be able to fold these costs into the value of your loan, as well, so you can pay them over time.
Expect More Out of Your Mortgage
If you want to shop rates for rate and term refinance, contact Associates Home Loan of Florida, Inc. We’ve worked with clients in Orlando, Tampa, and Sarasota for many years. We offer free quotes and fast approval for clients.