October 07, 2019
What Are My Options?
It is important to consider the types of loans, and how they fit in with your goals.
- Fixed Rate is a home loan with a rate that never changes.
- Adjustable Rate Mortgage (ARM) is a home loan that has an initial interest rate that is fixed for a set period of time and then is subject to adjustments at set intervals, where the rate can go up or down.
Cash-Out Refinancing is a little different. This type of refinancing option replaces your existing loan with a new one for a larger amount. In order to do this, you must have built up equity in your home. For example, Joe Smith’s home has a value of $200,000 and his existing mortgage balance is $100,000. Since he has paid off $100,000 of his mortgage, this means he owns, and has $100,000 in home equity. If Joe refinances his loan for $150,000, he receives that extra $50,000 in cash at closing, which can be used towards home improvements or paying off a debt. Remember, when considering cash-out refinancing, you need to take into account closing costs.
What are some additional costs to keep in mind when refinancing?
In order to prepare yourself to refinance, keep in mind these additional costs –
- Closing costs
- Application fee
- Title search fee
- Inspection fee
- Attorney and lender fees
- Prepayment penalties on your old payment
How do I apply?
If you have come to a decision, and are ready to apply, visit PenFed.org to get started.
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