Refinancing to Reduce Your Rate but Keep Your Term

You may be considering refinancing your mortgage because interest rates are low, or your financial situation has changed. You don’t really want to take cash out, but perhaps you want to do a rate term refinance, which is when you reduce the interest rate or term (time frame of the loan), or you do both. One concern that may have kept you from moving forward is that you don’t want to extend your loan term back to a 30-year loan. After all, you’ve put in years of payments. This is where a mortgage professional can help you analyze your situation and provide recommended solutions for your home financing goals.

In addition to offering common fixed rate conventional loan terms of 10, 15, 20, 25, and 30 years, loanDepot offers smart Term™ loans. These loans include a feature that allows you to choose a term between 8 years and 29 years* when doing a refinance. For example, let’s say you’ve had your loan for 7 years with 23 years left on your current mortgage. You know that you could save on your monthly payment with a refinance, but you don’t want to extend your payments for another 25 or 30 years. Well, you can choose to do a refinance with a 23-year term with a smart Term™ refinance loan.

While smart Term™ is an option, your mortgage professional will also consider reducing your term to a shorter time frame, such as 20 or 15 years. Some homeowners feel comfortable with the monthly payment on a shorter term, and they value paying the mortgage off even quicker.

What are other reasons to consider a rate and term refinance in today’s environment?

• Your current mortgage is a variable rate mortgage, and you want the peace of mind of a fixed rate mortgage.

• Your current mortgage has monthly mortgage insurance, and you want to remove or lower that mortgage insurance payment now that your home value has appreciated**.

• Your credit has significantly improved, and you want to take advantage of lower interest rates with your improved credit scores.

In all situations mentioned above, a mortgage professional should evaluate your interest paid over time and the closing costs to do the refinance***. There may be times when refinancing your mortgage loan does not tally with current financial and homeownership goals.

To discuss refinance options available to you, contact one of our loanDepot Loan Consultants today.

*Product excludes the following terms: 10, 15, 20, and 25 years. Eight, 9, 10-, 15-, 20-, and 25-year high balance/ super conforming terms are not available for selection. **Certain requirements apply. ***By refinancing the existing loan, the total finance charges may be higher over the life of the loan.