Which refinancing option is best for you? - Troy Bank & Trust Company, Inc, AL

Which refinancing option is best for you?

There are not quite as many loan programs as there are borrowers, but it seems like it sometimes! At Troy Bank and Trust we will work with you to find the best loan program to fit your needs. There are some general considerations you can have in mind in advance.

Are you refinancing primarily to lower your rate and monthly payments? Then your best option might be a fixed-rate loan. Maybe you have a fixed-rate mortgage now with a higher rate, or maybe you have an ARM -- adjustable rate mortgage -- where the interest rate varies. Even if it is low now, unlike your ARM, when you qualify for a fixed-rate mortgage you lock that low rate in for the life of your loan. This often is especially a good idea if you do not think you will be moving within the next few years or so. On the other hand, if you do see yourself moving within the next few years, an ARM with a low initial rate might be the best way to lower your monthly payment.

Are you refinancing primarily to cash out some home equity? Maybe you want to pay for home improvements, pay your child's college tuition bill, or take your dream vacation. Then you will want to qualify for a loan for more than the balance remaining on your current mortgage. If you have had your current mortgage for a number of years and/or have a mortgage whose interest rate is higher, you may be able to do this without increasing your monthly payment.

Are you wanting to cash out some equity to consolidate other debt? If you have the equity in your home to make it work, paying off other debt with higher interest rates than the interest rate on your mortgage -- for example, credit cards, home equity loans, car loans, some student loans -- means you can save possibly hundreds of dollars a month.

Do you want to build up home equity more quickly, and pay off your mortgage sooner? Consider refinancing with a shorter-term loan, such as a 15-year mortgage. Your payments will be higher than with a longer-term loan, but in exchange, you will pay substantially less interest and will build up equity more quickly. If you have had your current 30-year mortgage for a number of years and the loan balance is relatively low, you may be able to do this without increasing your monthly payment -- you may even be able to save! For example, years ago you took out a $150,000 30-year mortgage at eight percent, your payment is about $1,100, exclusive of taxes, insurance and so on. If your balance today is down to $130,000, you might take out a 15-year mortgage at six percent and have an almost identical monthly payment. This is a great option for people whose main goal is not to save money on their monthly payment but rather to build up equity and pay off their home more quickly.

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Rates vary daily and are subject to change without notice.

All loans are subject to credit approval, verification, and collateral evaluation. Initial decision is subject to you meeting specific underwriting requirements and final approval will be based upon you satisfying those requirements. Loans originated by Troy Bank and Trust Company.

This information is provided for illustrative purposes only and does not constitute an application. This notice does not guarantee loan approval, nor is it an offer or commitment to make a loan to you on the above terms. The APR, fees, and closing costs are all estimates based on Troy Bank and Trust Companys normal and customary fees and typical tax and insurance costs in the stated property's vicinity.