Whether your goal is to pay off your mortgage loan early or lower the monthly payments, you have options. There are several strategies you can apply to help implement your financial plan. Most homeowners are aware of the good and the bad about refinancing but that is all.
Luckily, there is another option available to select mortgage borrowers. Behold, re-amortization.
Refinance to a Longer Term
Refinancing your mortgage is a popular option, as it gives you more time to repay. Homeowners who have made payments on a 20-year loan, for instance, can refinance the remainder back out to 20 years.
However, extending loan terms also means adding on interest charges. This reality is especially the case if you have been paying for a long time, which should be more of a last resort for you.
Look for a streamline refinance loan product, instead. Some loans backed by the government, like the Federal Housing Administration and Department of Veterans Affairs mortgages, offer lower fees and less paperwork.
Consider a Loan Modification
If you have had a severe financial hardship and can no longer afford your mortgage payment, you should consider a loan modification. It is when a lender can restructure your loan in ways to lower your monthly payment.
You do not need to be in default to apply for a loan modification. If you are facing financial hardship, like a loss of a job or retirement, it is a great idea to get ahead of the problem. Lenders could also guide you to HUD-approved housing counselors who could better help with your situation.
Get Rid of Mortgage Insurance
You can learn how to lower mortgage payments through understanding your current real estate market. If it is rapidly appreciating, for example, you can potentially refinance your loan. You may be able to refinance your loan with lifetime insurance into a standard loan without mortgage insurance.
Your credit score and the home’s increase in value can play a large part in making this work. You would also need to have at least 20 percent in equity in your home to get rid of your mortgage insurance. That requires a lender’s appraisal to show a substantial increase in the home’s market price, which depends on how much you put down.
Refinance Your Loan to a Lower Rate
Perhaps you have considered refinancing your loan to a lower rate. You could replace your mortgage with a new loan at a lower interest rate. In turn, that process could lower your monthly payments.
However, you will need equity in your home to pull this off. Increasing home values could work in your favor, but you will need a great credit score as well.
If you truly want a significantly lower rate, this is what could drive down your payment. Improving your interest rate slightly will not make a big difference. Especially considering the costs of a refi, which will include closing costs similar to those paid on your existing mortgage.
The Bottom Line on Re-Amortization
Before deciding to apply for a loan recast, be sure to consider these options. Compare the financial benefits of each of these options to determine what will meet both your short-term and long-term financial goals. Contact us today to discuss what your re-amortization options are!
7th Level Mortgage is a leading one-stop mortgage company providing deeply informed, custom-tailored assistance with every phase of each mortgage transaction. If you are searching for a home loan in New Jersey, Pennsylvania, Delaware, Maryland, New York, or Florida, please contact us today so that we can determine the best Mortgage Lender to place your loan with and get you the best possible rate and program.