Loan Refinance
In essence, refinancing can alter the monthly payments owed on the loan either by changing the loan's interest rate, or by altering the term to maturity of the loan. More favourable lending conditions may reduce overall borrowing costs. Refinancing is used in most cases to improve overall cash flow.
Another use of refinancing is to reduce the risk associated with an existing loan. Interest rates on adjustable-rate loans and mortgages shift up and down based on the movements of the various indices used to calculate them. By refinancing an adjustable-rate mortgage into a fixed-rate one, the risk of interest rates increasing dramatically is removed, thus ensuring a steady interest rate over time. This flexibility comes at a price as lenders typically charge a risk premium for fixed rate loans.
In the context of personal (as opposed to corporate) finance, refinancing a loan or a series of debts can assist in paying off high-interest debt such as credit card debt, with lower-interest debt such as that of a fixed-rate home mortgage. This can allow a lender to reduce borrowing costs by more closely aligning the cost of borrowing with the general creditworthiness and collateral security available from the borrower. For home mortgages, in the United States, there may be certain tax advantages available with refinancing, particularly if one does not pay Alternative Minimum Tax.
[edit] Risks
Most fixed-term debt contains penalty clauses (known as "call provisions") that are triggered by an early payment of the loan, either in its entirety or a specified portion. In addition, there are also closing and transaction fees typically associated with refinancing debt. In some cases, these fees may outweigh any savings generated through refinancing the loan itself. Typically, one only rationally considers refinancing if the potential for a substantial cost savings exists, or if there is a need to extend the loan due to weak cash flow or other non-recurring commitments.
In addition, some refinanced loans, while having lower initial payments, may result in larger total interest costs over the life of the loan, or expose the borrower to greater risks than the existing loan, depending on the type of loan used to refinance the existing debt. Calculating the up-front, ongoing, and potentially variable costs of refinancing is an important part of the decision on whether or not to refinance.
Recent action by the Federal Government to lower mortgage rates has resulted in some of the lowest refinance mortgage rates in recent history. And President Obama’s Loan Modification Plan has made refinancing to a lower mortgage rate and payment easier for millions of Americans. This is one of the best times ever to refinance, so don’t wait! Find out today about loan refinance options that will help you obtain a lower monthly mortgage payment.
Lowering Your Mortgage Payment is Easier Than Ever
* Recent Fed action has caused mortgage rates to plummet! Refinance today to take advantage of a much lower rate and payment. If you wait, you might lose out.
* President Obama’s Loan Modification Plan has opened the doors of refinancing for millions! Find out if you qualify for a lower payment through the Loan Modification or Refinance Plus programs. Ask us about this today.
* Change the term of your loan – if you’re in a 15-year mortgage, refinancing to a 30-year fixed-rate mortgage could lower your payment significantly.
Keep More Money in Your Hands
* Today’s extremely low mortgage rates mean you could pay less toward your mortgage every month and keep more money in your pocket.
* Use the extra money you save on your refinance to pay off high-interest debt, finance home improvements, or increase your retirement savings – whatever you want to do with it. It’s your money – enjoy it!
No Pre-Payment Penalties
* Quicken Loans allows you to refinance your loan or pay off your mortgage early with absolutely no pre-payment penalties.
Most Popular Loans for Lowering Your Monthly Payment
* FHA ExpressSM
Refinance out of a skyrocketing mortgage payment with the fixed-rate security of a government-insured FHA loan. Find out if you could refinance without an appraisal with our easy FHA Streamline tool.
* 30-Year Fixed
Looking for a more traditional loan option? Lock in today with a 30-year fixed.
* Jumbo Loans
Get a low payment on your big loan! A jumbo loan is any loan over $417,000. We have low rates for loans up to $2,000,000.
* Smart PMI
You could lower or eliminate your expensive mortgage insurance payments with our Smart PMI or PMI Buster loan.
* VA Loan
Get a low rate and payment with the VA loan if you're a qualified veteran, military member, or spouse. Ask us if you are eligible for the great benefits of a VA loan!
Calculate Your Mortgage Payment – See How Much Lower It Could Be
* Enter your current mortgage balance and monthly payment into our online mortgage payment calculator and we’ll show you your potential monthly payments with several different loan options.
Why Choose Quicken Loans?
* Save time. No long forms to fill out.
* Expert Advice. We find the right loan for you.
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