As interest rates rise, many homeowners will shy away from refinancing options. However, there are still affordable, smart choices for those individuals looking for a refinance mortgage. Whether you're looking to consolidate debt, retire early or for mortgage apartment deals, you've come to the right place. The key is knowing what to look for and determining if it would benefit you in 2017. The best option for existing homeowners, this year, is to refinance with a 15-Year Mortgage. Compared to a, more traditional, 30-Year Mortgage you can save thousands of dollars by the time you’ve paid off your loan.
Are You A Good Possibility For A Refinance Mortgage?
Homeowners who have benefited from rising home values in the last six years are most likely to be approved for 15-Year mortgages. These lucky individuals have a lower loan-to-value ratio and can be approved for even better interest rates. This can also be an option for anyone who has been reducing their principal amount significantly, through higher payments, for the last several years.
Another type of homeowner who can apply for a 15-Year refinance mortgage would be those living in multi-family units. If you purchased a 4-unit home, for example, and currently live in one of the apartments, you may qualify based on the increased income of renting out the remaining 3-units.
Lastly, those investors who purchased commercial apartment buildings in the past can benefit from refinancing to facilitate improvement or expansion. There are lots of apartment deals available for the savvy investor.
Why Refinance With A 15-year Loan?
The interest rates on 15-year mortgages usually average a couple of percentage points lower than corresponding 30-year loans. On average, you could save tens of thousands of dollars. Another money saving factor is the elimination of mortgage insurance payments. Once you've accumulated 20-percent in home equity, private lenders allow you to cancel your mortgage insurance. That is a huge saving, especially over the next 15 years.
Retirement planning is another key factor. If you're looking to retire in 20 years, a 15-year plan is optimal for you. This allows you to live mortgage-free for five years before you stop working. Additionally, it equates to one fewer payment each month when you'd rather be enjoying your free time. Conversely, you could choose to sell your home when you retire and use the considerable profits to travel or buy a home in a relaxing destination.
Home improvements can be made with a cash-out 15-year refinance. This allows you to remodel, increase the value of your home and quickly rebuild your equity. For those living in multi-family units and invested in commercial real estate, it's ideal to consider improvements or expansions which can increase your revenue and allow you to offer better apartment deals to renters.
Debt Consolidation is another great use for 15-year refinance programs. Whether you have credit cards, a home equity loan, or both it can be helpful to use a cash-out refinance or wrap your HELOC with your mortgage refinance for a 15-year fixed plan. This can allow you to retire debt and mortgage free in only 15 years.
Payments, Interest, and Refinancing
Occasionally, the combination of lower rates and reduced loan balances, can offset the shorter loan term and keep your monthly payments similar to what you've previously had. This is especially true if you've been paying extra on your mortgage to reduce the principal owed already.
But, in most cases, you will pay more each month once you refinance, to a shorter term. While you will be signing up for higher monthly payments, it's also true that a 15-Year loan will save you money. Interest rates are significantly lower, and this equals more cash in your pocket. You can compare current rates and get an idea if the 15-year refinance loan will benefit you before applying.
Overall, 2017 is the perfect year to refinance your home, duplex or apartment complex. While the traditional 30-Year rates are increasing, you can save a significant amount by applying for a 15-Year Mortgage. There are various apartment deals and non-conventional loan programs which can improve your bottom line. If you are looking to retire, travel the world, sell your home or remodel in the next 20 years, this is the solution for you.