Customize Your Loan!

There are so many lenders out there to choose from and with current interest rates pushing an historic low, it's easier than ever to customize your own loan terms. Below are a few suggestions to help save you money on your next loan:

No Closing Cost Loans

This is a loan in which the lender pays all of your closing costs including title & escrow fees, appraisal, lender's fees, credit report fees and other expenses which are non-recurring. That way there is no immediate cost to you.  No closing cost loans are easiest to get when refinancing, but not impossible when purchasing a new home. Their popularity stems from their ability to generate immediate interest rate & payment savings with no up front investment in closing costs. In a market where interest rates are continuing to decline, this is the best way to refinance your home because it enables you to refinance again soon, if you choose to, without having to bite the loss of the initial closing costs.

Hybrid Loans

Perfect for someone looking for the security of a fixed-rate mortgage & the low interest rate of the adjustable rate mortgage (ARM).  This type of loan secures a fixed rate for a certain period of time (usually 3,5,7 or 10 years). After that time is up it adjusts the rate based on the mortgage market and rolls over into another ARM.  This cycle continues until the 30-year term is up.  The benefit to a hybrid loan is that it requires a lower rate of interest and you can pick the time period that best matches the amount of time you will be in your home.

ARM Teaser Rates

Many lenders offer a low introductory rate for the first six months to a year on adjustable rate mortgages. You can take advantage of this offer for the introductory period and then refinance before the rate goes up.  This may seem risky, and works best with a no closing cost loan so that you can avoid paying closing costs every time you refinance.  It is best to use this tactic only when your loan exceeds $200,000.   This is because it is difficult to obtain a no closing cost loan below this amount.  The biggest risk to this strategy is that the market rate may go up when it is time to refinance. However, rates don't go up overnight and the amount you can save up front in the meantime may outweigh the higher rate in the long run.

Eliminating PMI

If your initial down payment was less than 20%, then you most likely are paying PMI - private mortgage insurance. As your home appreciates and/or your loan balance decreases, your equity will exceed 20%.  At that time it is favorable to refinance to get rid of the PMI monthly payments.  The savings on your PMI alone can often cover the cost of refinancing.

For help with other questions you may have, please email us or give us a phone call.  The team at AV HomeConsultants is always willing to help in any way that we can.