A 15-year loan term has many advantages, although it may appear to be expensive because of the higher monthly amortization. However, a shorter loan term assures you that you'll be free from this burden before or at the time of retirement and save thousands of dollars. Consider having your loan restructured to a shorter loan term.

Benefits of a Shorter Loan Term

The prospect of spending 30 years paying back a mortgage is discouraging. If you have 20 years remaining on your loan, the option to shorten your loan term to 15 can be tempting. Taking away 5 years from a 20-year loan means a higher monthly bill, but freedom from the mortgage after 15 years instead of 20 is definitely more appealing. But if it's only a matter of a few hundred dollars more, why not? Never mind if you'll be paying a higher monthly bill.

You'll be saving thousands of dollars from interests alone with the five years knocked off from the 20-year loan term. Another benefit is building your home equity faster. A refinance mortgage loan offers the chance to restructure your terms.

What's Involved

For a home mortgage, the lender will pull your credit record to check if you've been paying your debts on time. You'll also be paying the fees involved before, during, and after your loan is processed.

The lender will assess all the information to evaluate if you are a good risk for a shorter loan term. If you're dealing with the same lender, the process won't be as rigorous and as lengthy like it would be if you go to a new lender.

It's a fact that lenders prefer long-term mortgages because it rakes in more profits. To counter loss in future profits, lenders penalize borrowers for paying their mortgage ahead of term. This is why prospective borrowers should always inquire if the lender charges prepayment penalties.

Assuming that your lender does not charge penalties on prepayment, you have to contend instead with the closing costs for your refinance mortgage loan.

Others get a refinance mortgage loan to switch to a short term interest only loan. They are banking on the equity of the house and intend to sell it in the near future. The proceeds of the sale will go to the interest and they can still have extra money from the profit. In your case, you're looking at the full ownership of your home in a shorter time.

For a new loan, you can decide if you want a fixed rate mortgage or an ARM. An online calculator can compute how much you're going to pay the monthly bill in 15 years' time. From the calculations, you'll be able to determine the feasibility of a short term ARM or fixed rate refinance mortgage loan.

Short Term or Long Term?

A short term, or traditional loan, will always depend on your financial situation and future plans. A short-term refi is ideal now that interest rates are low. You'll be surprised that you'll be paying the same monthly fee as your first mortgage, so there's not much of a change in the monthly bills. The prospect of paying off your loan in 15 years, however, is imminent. For those who feel secure with the stability of the traditional 30-year loan term, switching from an ARM to a fixed rate refinance mortgage loan is recommended.

While walking your dog, you may have seen rows of houses for sale. You want one of those brick houses with three bedrooms to accommodate a growing brood of kids. The possibility is not remote if your home's value has increased considerably. A refinance home scheme may let you enter one of those bigger homes.

Ready to Jump Through Hoops?

For your first mortgage, you had to undergo a paper chase to satisfy the requirements of the mortgage company. This experience will serve you well. But for your refinance home project, there are still some do's and don'ts to observe to give yourself the upper hand when entering a contract.

So check your documents. Are your tax income papers in order? Is your credit history satisfactory? Is your employment record updated? Are the records of the first mortgage complete and neatly filed? These are just some of the documents to prepare. Looking for lost documents or calling up certain offices for your records eat up your valuable time just when the refinance home loan agent is ready to talk to you.

When you're ready for an audience with the loan agent, make sure you've done your homework. You should know about mortgages before signing a contract. One simple rule is: don't rush into a refinance home loan.

The Do's

Find out about your home's value. If this has increased, expect to pay more for the mortgage. But settle on a company that offers a lower interest rate than your present mortgage. The new loan should be able to give you 2% less in interest rates than your current loan.

Do shop for lower interest rates. You may be surprised that an adjustable mortgage rate is lower than a fixed mortgage rate. The catch, though, is the possibility that your monthly bills might shoot up. Consider this if this is not a risk.

Do ask about penalties for loan prepayment and getting out of the contract. The loan agent should make it clear that you have the right to rescind the contract within three days, which is the rescission period.

Do make sure that if you're going to resort to this option, let the refinance home company know of your decision and your reasons through a formal letter followed up with a telephone call to the right people before the 12PM deadline on the third day.

Do check the company's background if you're using a new mortgage company. With several mortgage companies competing for business, you might fall for a lousy deal with the lure of very low interest rates and no closing fees.

The Don'ts

Don't be rushed into a home refinance loan, and don't be afraid or intimidated by the mortgage companies. Check out online sites that provide information on consumer rights.

Don't entertain calls purportedly coming from companies requesting more information. Go to the company office. Inform them of the request for additional information and verify if indeed this request came from them.

Don't entertain strangers offering a better deal and cash even if they give their credentials. Tell them you prefer to discuss things in their office. Don't sign anything. Some people lost their homes to scammers because of those nice strangers.

These tips can help you safeguard yourself from getting duped into dubious deals. Your new loan should be your chance to own a home, not lose it.

Opting for a second mortgage is a popular method for homeowners to raise additional finance. The homeowner can leverage additional equity against the property value of his or her house. Until recently, second mortgages were often frowned upon. The general public felt that a second mortgage was an indication that a person was unable to maintain his or her finances. Today, this view no longer holds true, and there are a number of financial institutions offering various schemes for second mortgages.

As the name suggests, a second mortgage is a mortgage that is secured on a property that already has a first mortgage on it. The value of the second mortgage will be calculated by subtracting the value of the first mortgage from the value of the home.

The second mortgage may be taken from a different lender as compared to the first. The money received from the second mortgage can be used for a variety of purposes ranging from funding home improvements to debt consolidation. As with the case of a first mortgage, a second mortgage is secured against the borrower's home. This means that the borrower risks forfeiting his home in case he is unable to meet the payments of the mortgage.

There are three main types of second mortgages offered to customers. These are a traditional second mortgage, a home equity loan and a home equity line of credit. A home equity line of credit will set a maximum limit on the size of the first and second loans. This is usually between 75% and 85% of the appraised value of the owner's property. The advantage of this type of second mortgage is that it allows you to repay the loan amount according to your own capabilities and does not enforce a strict monthly payment regime on you.

Different financial institutions offer variations of these types of mortgages. Due to the wide variety of second mortgage schemes available to the customer, interest rates for second mortgages are very attractive. Interest rates in some cases of second mortgages even fall bellow the prime lending rate. The length of a second mortgage usually begins at one year and extends to as long as 15 to 20 years. Loans of smaller amounts should ideally be repaid in shorter durations, as if stretched over long periods; the borrower would have to pay greater interest.

In the housing world usually most houses have mortgages. A Mortgage or A Deed of Trust with a Note is a lien against that property. However legitimate mortgages are not a problem. They technically are clouds, but they are so common that it's just expected for them to exist. And they are easy to remove; they just need to be paid off before property ownership transfer.

Actually in many states any other lien except for government liens will be wiped out when buying Tax Liens and later foreclosing on them or when buying Tax Deeds. Make sure you check with the county officials and the statutes for your state. But if your state is one of them, then you can easily go and pretty much disregard mortgages. They just mean that the property is more likely to be redeemed because the entity holding the mortgage will not let the property go for taxes and rather redeem it themselves. But in that case you get your money back PLUS a great interest rate (usually).

When buying properties directly from the owner, you will need to find out the pay-off amount so you can determine if this property is worth your efforts. This is easily obtained by having the seller sign a simple form authorizing you or the title company to talk to the lender to get the figure, and then basically as part of the closing process you pay, or the title company pays, it off (and of course that amount is subtracted from what the seller gets for the property).

There is an enormous amount of talk in news and media with regards to interest rates being a three year lows and now must be a good time for homeowners to refinance into 30 year fixed rate loans. It's not a marketing secret that scaring the crap out of consumers is a pretty useful sales tactic. People buy on emotion and make emotional decisions and the news media and advertisers sell products that way.

I have been pounding the table since May 2007 that the Federal Reserve would start to lower rates in the fall of 2007; you can see my Blog post about interest rates being lower and look for topics under May 2007. So this big whoop la comes as no surprise. What needs to be understood is that mortgages just like any investment should be managed. Just like investments, different loan products "perform" better during certain periods and working with a certified mortgage planner allows customers to take advantage of changes in market sentiment and conditions and save $10's of thousands of dollars.

Managing a mortgage is not about getting the lowest interest rate. It's about matching the mortgage to the client's financial goals. When you match the mortgage to their financial goals rates do not matter. The loan program that you have is meeting a certain financial need of the borrower.

This is part of wealth creation I explain to clients. In this business I have meet many people who have achieved great wealth by aligning their mortgage (s) to their financial need. I have never met one that achieved great wealth because they received the lowest mortgage rate.

It's my job as a certified mortgage professional to help borrowers make smart choices in selecting or maintaining a home loan. So to answer the question, should a homeowner with an adjustable rate refinance to a fixed mortgage rate? In a broad and general sense, absolutely not! Many people are going to be enticed to refinance into long term fixed rates. If the only reason someone is refinancing is to secure a "lower rate", then save your money.

Let's take a look at just two popular adjustable loan programs and important points.

MTA Indexed Loans (Option Arms)

The MTA Index is a lagging index, meaning it takes a snapshot of the last 12 months of the CMT or Constant Maturity Treasury. Right now the MTA index is at 4.522% down from 5.0142% in February 2007. More importantly, the CMT, is at 2.19%. So over the next 12 months those with MTA loans could have a rate based on 2.19%, a full 2.33% lower than the current 4.522%.

1- Month LIBOR Indexed Loans

For those with U.S. denominated 1MO LIBOR (London Interbank Offered Rate) loans another popular index for an adjustable loan, is currently trading at 3.285% down from 5.3% last January, over 2% less.

So it would not be in the best interest of anyone refinancing just for rate. If you were refinancing for a life goal i.e. college or retirement planning, then that's a whole different topic. There is so much money wasted with consumers refinancing just to reduce their rate and 80% of the time they are ADDING years to their mortgage. So what is the real savings? Do you add 3, 5 or more years to save a couple hundred dollars a month? No advice, bad advice and D.I.Y.'s loose 10's of thousands maybe even hundreds of thousands. It's really a shame some consumers do not spend more time investigating mortgage professionals based on advice.

Alan Greenspan has taken a lot if criticism recently for a statement he made recommending homeowners back in 2004, that they should have adjustable rate mortgages. Greenspan stated "the certainty of fixed-rate mortgages may not be worth cost. In a rare evaluation of the interest rate options that households face, he questioned whether American homeowners are well-served by popular fixed-rate mortgages."

His point can be best explained this way. I have a chart that I show most all my clients. This chart shows the last 210 years, yes 210 years, back to 1790, of Treasury Bonds and what this chart shows is that for 185 of the last 210 years, mortgage rates have been below 7.5%. I can not publish the chart here for copy write reasons.

If you look at a chart of interest rates since the Reaganomics era, rates are on a decisive and consistent downtrend. After a high of 18.25% in January 1982, they went all the way down to the 7% range by the year 1990. Interest rates consolidated in the 7%-8% range till the year 2000. Between the years, 2000 - 2005 they resumed the downtrend to a low of 4.5% - 5%. From 2005 - 2007 they went up to 6.5% and again in January 2008 resuming the down trend again.

We were refinancing loans at 4.5% and borrowers telling us rates will never be this low again. How misinformed!

So at what point between the Reagan era and today would a consumer have been best served in a 30 year fixed rate loan? You would ALWAYS have been better in an adjustable rate loan, for the last 25 years. Even if you had an adjustable during the Reagan years and paying 14% -16%, rates are relative. Whatever mortgage rate you pay, is pretty easy to receive in other interest bearing accounts, meaning you were receiving 14% - 16% in pretty conservative savings accounts, certificates of deposit etc. Look how easy it is to get a 5% guaranteed rate today.

You have to understand The Why behind the high rates of the 1980's. Once you understand The Why, it can be said with pretty good certainty that we will not see double digit interest rates again. Our economy, monetary policy and foreign policy are vastly different than back in the Carter - Reagan years.

There is an enormous amount of talk in news and media with regards to interest rates being a three year lows and now must be a good time for homeowners to refinance into 30 year fixed rate loans. It's not a marketing secret that scaring the crap out of consumers is a pretty useful sales tactic. People buy on emotion and make emotional decisions and the news media and advertisers sell products that way.

I have been pounding the table since May 2006 that the Federal Reserve would start to lower rates in the fall of 2007; you can see my Blog post lower interest rates and look for topics under May 2007. So this big whoop la comes as no surprise.

What needs to be understood is that mortgages just like any investment should be managed. Just like investments, different loan products "perform" better during certain periods and working with a certified mortgage planner allows customers to take advantage of changes in market sentiment and conditions and save $10's of thousands of dollars.

Managing a mortgage is not about getting the lowest interest rate. It's about matching the mortgage to the client's financial goals. When you match the mortgage to their financial goals rates do not matter. The loan program that you have is meeting a certain financial need of the borrower.

This is part of wealth creation I explain to clients. In this business I have meet many people who have achieved great wealth by aligning their mortgage (s) to their financial need. I have never met one that achieved great wealth because they received the lowest mortgage rate.

It's my job as a certified mortgage professional to help borrowers make smart choices in selecting or maintaining a home loan. So to answer the question, should a homeowner with an adjustable rate refinance to a fixed rate? In a broad and general sense, absolutely not! Many people are going to be enticed to refinance into long term fixed rates. If the only reason someone is refinancing is to secure a "lower mortgage rate", then save your money.

Let's take a look at just two popular adjustable loan programs and important points.

MTA Indexed Loans (Option Arms)

The MTA Index is a lagging index, meaning it takes a snapshot of the last 12 months of the CMT or Constant Maturity Treasury. Right now the MTA index is at 4.522% down from 5.0142% in February 2007. More importantly, the CMT, is at 2.19%. So over the next 12 months those with MTA loans could have a rate based on 2.19%, a full 2.33% lower than the current 4.522%.

1- Month LIBOR Indexed Loans

For those with U.S. denominated 1MO LIBOR (London Interbank Offered Rate) loans another popular index for an adjustable loan, is currently trading at 3.285% down from 5.3% last January, over 2% less.

**Every index is different and will not perform the same. There are no fewer than TEN different indices for adjustable loans. So if you have any questions regarding your specific situation and how the current rate environment affects your loan please give us a call.

Why on earth would you refinance now into a fixed rate? Any mortgage professional, financial advisor, or hopefully this is not the case but ....neighbor or friend telling you rates are not going lower, FIRE THEM. They do not have any idea what they are doing. Interest rates just are not going north anytime soon and have further to decline.

Alan Greenspan has taken a lot if criticism recently for a statement he made recommending homeowners back in 2004, that they should have adjustable rate mortgages. Greenspan stated "the certainty of fixed-rate mortgages may not be worth cost. In a rare evaluation of the interest rate options that households face, he questioned whether American homeowners are well-served by popular fixed-rate mortgages."

His point can be best explained this way. I have a chart that I show most all my clients. This chart shows the last 210 years, yes 210 years, back to 1790, of Treasury Bonds and what this chart shows is that for 185 of the last 210 years, mortgage rates have been below 7.5%. I can not publish the chart here for copy write reasons but will show a chart from 1977 till April of 2007. If you want to see the 210 year chart just call our office at 804.282.8808 and leave a message on ext 203 and we will mail, first class, a copy.

If you look at the chart of interest rates since the Reaganomics era, rates are on a decisive and consistent downtrend. After a high of 17.5% in January 1982, they went all the way down to the 7% range by the year 1990. Interest rates consolidated in the 7%-8% range till the year 2000. Between the years, 2000 - 2005 they resumed the downtrend to a low of 4.5% - 5%. From 2005 - 2007 they went up to 6.5% and again in 2008 resuming the down trend again.

We were refinancing loans at 4.5% and borrowers telling us rates will never be this low again. How misinformed!

So at what point between the Reagan era and today would a consumer have been best served in a 30 year fixed rate loan? Never. You would ALWAYS have been better in an adjustable rate loan, for the last 25 years. Even if you had an adjustable during the Reagan years and paying 14% -16%, rates are relative. Whatever mortgage rate you pay, is pretty easy to receive in other interest bearing accounts, meaning you were receiving 14% - 16% in pretty conservative savings accounts, certificates of deposit etc. Look how easy it is to get a 5% guaranteed rate today.

You have to understand The Why behind the high rates of the 1980's. Once you understand The Why, it can be said with pretty good certainty that we will not see double digit interest rates again. Our economy, monetary policy and foreign policy are vastly different than back in the Carter - Reagan years.

The Bottom Line: A mortgage must be tied to your long and short term goals. Whether buying or refinancing, the mortgage must be strategically considered in ones over all financial plan that they have for their life. If the refinance correlates with a specific goal then now would be a good time to look at your options. But if its just to lower a rate than it probably would not be beneficial.

Living in a house that's in sad disrepair can be a drag. It does sap your energy when you look at stained vinyl floors, peeling paint, and a gloomy kitchen. A refinance home loan can do wonders for a house that's screaming for a makeover.

Double Whammy with A Refinance Home Loan

If you're roused from sleep by the leak from the ceiling that's also showing signs of rotting and peeling paint, it's time to fix the roof, not push your bed to a corner to place a basin on the spot to catch the drip. Perhaps your kitchen is an eyesore with dishes and pans crowding out each other on a narrow counter and a jam-packed crockery cabinet. Don't let your mortgage sit prettily, get a refinance home loan to give your house a makeover it deserves.

A home loan refinance also gives you a crack at a mortgage with lower interest rates. If your mortgage is on its fifth year, you've already deducted thousands of dollars from your balance. This can maneuver a mortgage that's smaller than your initial loan. A lower monthly payment becomes possible because of reduced interest rates. Plus you can pay off your initial mortgage and have the cash you need to do some home improvements.

The further federal cuts in interest rates may be good for your existing adjustable rate mortgage. Interest rates are at the lowest. This is a good time to get a home loan refinance BUT approval will depend largely on your credit score. However, some banks or lending institutions may be able to work it out with you.

The amount of your home loan refinance will be determined by your credit score and the current assessed value of your home. Of course, you won't be doing a Hollywood makeover for your little home. But you can do a makeover that will be the envy of your neighbors - without cleaning out your pockets. A dash of creativity and ingenuity can stretch your home loan refinance proceeds.

Home Improvement on A Budget

If your roof has leaks, have it inspected and assessed by a professional. Perhaps it will only entail the replacement of roofing materials on a small area. The affected ceiling can be restored to its previous state with some tricks of the trade.

You can have the kitchen refurbished with more cabinets and the walls freshly painted with warmer hues. Have your cabinet refaced and drawers added. This is cheaper than having a new set of cabinets. Update your lighting fixtures and change the sink and kitchen faucet set. The baths can be buffed up with minimal cost. Change the toilet seat covers and re-grout dingy and chipped tiles. Rid the stained bath floor and install vinyl flooring and a fresh coat of paint on the bath walls will work magic. Voila! The transformation will be incredible.

Make the Switch Now

If the current value of your home is appraised at $200,000 and you own $100,000, your equity is $100,000. With your refinance home loan, you can opt for cash out to do some minor home makeovers. Who knows? You might be moving out of the house with a buyer ready to take over. Just in time when you've done a good job with your home improvement. It does pay to be ready for any eventuality.

Talk about your requirements with your loan agent to switch from an ARM to a fixed rate mortgage. You want an interest rate much lower than your current mortgage and the cash out option. Review or repair your credit score so you can get the best rates in town. Mortgage companies are adapting stricter controls and the best gauge to assess if you're a good risk is your credit score. If your credit score is good, your refinance home loan will be approved without a hitch.