The majority of your mortgage payment goes toward paying interest. To save an astounding amount of money over the long term, choose a mortgage loan with a lower rate and a shorter payback term. A 15-year mortgage may be just what the financial planner ordered. This type of loan carries a larger monthly payment; but if your budget can withstand the jolt, you can save big bucks over the long haul.
When you do a cash-out refinance you are leveraging the equity in your home in order to receive a lump sum of cash at closing. Many individuals and families use this type of loan if they want to remodel their home, or they have kids that are attending college soon. Veterans and other military personnel can now take advantage of a 100% cashout refinance thanks to the Veterans Benefits Improvement Act of 2008.
Unless you are getting a lower interest rate, refinancing your home may cost you more money in the long run and may require you to pay higher monthly payments.
If your monthly payment on a fixed-rate loan includes escrow amounts for taxes and insurance, your payment each month could change over time due to changes in property taxes, insurance, or community association fees.
If your new mortgage rate seems too good to be true then it probably is. Check for hidden fees in your mortgage that will make up that suspicious difference.
