When searching for a Mortgage lender or any questions concerning a home loan, it is important to get the right answers. There are many aspects to consider, and lots of information to digest! Find the answers to some of the most common mortgage questions concerning mortgages and home equity loans.
Which Type Of Loan
Do I need a home equity loan or a home equity line of credit?
- Both of these procedures or loans will use your home as collateral. The primary difference between each of these types of loans include that the line of credit is accessible for a long-term draw, which is usually accessible by check or through online banking. Once your balance has been paid down, you then will have more money available to spend again when required. A home equity loan however will disperse all funds at once when the term of the loan begins, then you will not be able to access any more funds without refinancing.
- A line of credit will have an interest rate that varies, while a home equity loan will have a fixed mortgage rate.
Do I need a fixed rate or an adjustable-rate?
Fixed rate loans have interest rates that do not change throughout the lifetime of the loan. Adjustable-rate loans include rates that are links to an index, prime, and thus will likely change over time. Some factors that should affect your decision include that of how a higher monthly payment will affect your budget if the rate were to increase the length of time you plan to stay in your home.
Do I want an interest only loan?
These types of home loans allow you much flexibility on your monthly payments if your finances do not allow you to fully make a loan payment during a specific month. Your principal only decreases if you pay more than the minimum loan payment. This gives you the flexibility to decide how much principle you pay each month.
Why should I refinance?
There are many reasons why people choose to refinance loans that they already have. Some of the most popular reasons include the following:
- To lower the monthly payment
- To get a lower interest rate
- Switching from an adjustable-rate to a fixed rate or vice versa
- To refinance for a higher loan amount in order to pay off other debts, get cash, or make home repairs.
- Change the remaining term of the loan.
Whatever your mortgage needs may be, try to make a decision based on which loan will work best for your particular situation.