Overview

Adjustable-rate mortgages (ARMs) are great for certain people and situations.

Don’t pay more each month than you need to. If an ARM makes sense, why not go with one?

An adjustable-rate mortgage (ARM) is “a loan with interest rates that are adjusted periodically based on changes in a pre-selected index after a set fixed-rate period. As a result, the interest rate on your loan will rise and fall with increases and decreases in overall interest rates.”

There you have it. The official definition of an ARM.

What’s that? You still have questions? Ok, let’s start at the beginning.

What’s an Adjustable-Rate Mortgage Anyway?

First of all, an ARM is a home loan that has an interest rate that can adjust over the term of your loan, although it can only adjust up and down a set amount during your loan period. And that, of course is after the fixed-rate period (which with The Canto Team is always 3, 5, or 7 years). You see, most ARMs come with an interest rate cap, which limits the amount by which the interest rate can change (again, both up and down). Make sure you insist on an interest rate cap when you consider an ARM. You may regret it if you don’t.

Next, you might be asking “why would I ever want an ARM as opposed to a fixed-rate mortgage? Although it’s true that ARMs do have the potential to raise your monthly payments if the rate adjusts upward, an adjustable-rate mortgage can make a big difference in lowering your monthly payments, too. The reason is simple. ARMs almost always offer a lower rate during the fixed-rate period than other loans. A lower rate means a lower payment. So, whether you’re buying your first home or refinancing, an adjustable-rate mortgage is a popular option.

Who benefits from an Adjustable Rate Mortgage?

Home buyers looking for the lowest rate and lowest possible monthly payments may benefit from an ARM, especially if you are planning on staying in your home for less than 7 years.

A great example is the first time home buyer. Let’s set the stage. Imagine a young couple, they find a cute little home and buy it. If they are typical, in just a few years they will experience job transfers, more income, and (“gulp”) growing families. That cute little home is now very little. If this same young couple pays 1% more for a fixed mortgage vs. a 5-year ARM (where the rate is fixed for 5 years), on a $200,000 mortgage, that difference means the couple will pay approximately $10,000 more over those 5 years by choosing the 30-year fixed. Yes, you read that correctly. A 10 thousand dollar difference. That isn’t chump change, my newlywed friends.

Also, keep in mind that the average person who chooses an ARM usually moves or refinances before the ARM begins to adjust. In the rare case someone holds onto the ARM past the fixed period, the built-in security features (the interest rate cap) of an ARM kick in. So if you have a 2% interest rate cap, your mortgage rate could only rise 2% above your initial fixed rate, regardless of how long you keep your mortgage.

Should You Get an ARM or a 30-Year Fixed? Consider This..

When shopping for a mortgage, you must ask yourself a few questions: How long do you plan on being in the home? What are the savings you’d enjoy by taking the lower rate of the ARM vs. a 30-year fixed? If you find that you’d save $10,000 in the first 5 years by taking a 5-year ARM instead of a 30-year fixed – and you believe the likelihood of your moving in five years is high – taking the ARM makes a great deal of financial sense.

If you know for a hard fact that you won’t be moving in seven years, you’ve found your dream home and you don’t care what happens next, well, a 30-year fixed is probably your best bet.

As always, the best mortgage decisions start by working with a mortgage expert who can clearly outline the pros and cons of all of today’s mortgage programs. Go over the numbers, compare the loans, consider your situation and you’ll find the best mortgage to save you the most money.

An FHA Streamline refinance allows you to take advantage of lower mortgage rates by refinancing your current FHA loan into a lower fixed rate on a new FHA loan and you could even qualify for no appraisal and easier qualification.

The Canto Team offers FHA Streamline refinance, the easiest way to refinance your FHA loan. With FHA Streamline, you could refinance an FHA loan with no appraisal and no income/assets verification.

Not sure if an FHA Streamline is right for you? Find out if you qualify for an FHA Streamline refinance in just a few easy steps!

Refinancing an FHA Loan with FHA Streamline

An FHA Streamline offers an excellent opportunity to anyone currently in an FHA loan. All FHA loans qualify for the program, including 30- and 15-year fixed rate FHA loans and all ARM FHA loans. FHA Streamline will allow you to take advantage of lower mortgage rates by refinancing your current FHA loan into a lower fixed rate on a new FHA loan.

Lower Your Mortgage Rate on Your FHA Loan with FHA Streamline

The Canto Team makes it simple. If today’s mortgage rates are lower than the rate that you currently have, or you have an FHA ARM that may adjust upward, you can refinance your FHA loan up to the original amount of your current loan at today’s lower rates. And with FHA Streamline, you could qualify for an FHA refinance with no appraisal and no income verification. Some restrictions apply. It’s easy, quick and designed to get you a lower payment on your FHA loan.

What the FHA is saying about FHA Streamline

Here is some information from HUD’s website about FHA Streamline:

“The ‘streamline’ refers only to the amount of documentation and underwriting that needs to be performed by the lender, and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline refinance are:

• The mortgage to be refinanced must already be FHA insured.
• The mortgage to be refinanced should be current (not delinquent).
• The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.
• No cash may be taken out on mortgages refinanced using the streamline refinance process.”

Get an FHA Streamline and Get a Lower Mortgage Rate Today

Let’s review the benefits of an FHA Streamline. Let’s take into consideration a 30-year fixed rate mortgage of $250,000. Your monthly mortgage payment on this loan at 7% is approximately $1,663. If you were to lower the interest rate to 5%, your monthly payment would be approximately $1,342.

That’s a savings of:

• $321 Monthly.
• $3,852 Annually
• $38,520 in 10 years
• $115,560 over the life of the loan

Those numbers are catching the attention of homeowners across the country! Do I have your attention yet?

FHA Streamline Could Put Money Back in Your Pocket

It’s simple to see why the popularity of an FHA Streamline is so popular. It’s a program that every homeowner with an FHA loan should look into. If you have an FHA loan, a Streamline can lower your rate and payment today while still giving you the security of the FHA program. Get in touch with us at (888) 724-7402 and we’ll find out if you qualify for a quick and easy refinance to a lower rate and payment – with no appraisal required. It’s the fastest, easiest way to lower your payment on your FHA loan today.

Let us examine a few of the common myths surrounding President Obama’s new housing plan – Making Home Affordable. To find out if you qualify for the Making Home Affordable plan, go to http://makinghomeaffordable.gov or call a Home Loan Expert now at (888) 724-7402.

Myth: Everyone can qualify for a loan modification – regardless of their ability to pay their existing mortgage or their previous pay history.

Fact: Loan modifications are intended to prevent foreclosures for borrowers who are in default or are in imminent danger of default. If you qualify for a refinance now, you will NOT qualify for a loan modification – and pretty much any good loan modification attorney can tell you that.. There are very specific, stringent guidelines you must meet in order to qualify for a loan modification under the plan. A homeowner must prove financial hardship due to job loss, change in income, mounting debt, adjusting interest rate, etc. An official document must be signed certifying you can no longer afford your mortgage payment.

Myth: The government is able to drive interest rates lower in the future to help all borrowers.

Fact: The government has been attempting to drive rates down for the past three months. Though the Federal Reserve has been continually lowering the Fed Funds rate, this action or other action by the government cannot completely control the markets that determine mortgage interest rates. Rates can go up or down on a daily basis with little to no warning. What we do know now is that mortgage rates are historically low and homeowners are advised not to wait. To find out what mortgage rate you qualify for, call (888) 724-7402.

Myth: The refinance program will provide additional relief for those who can qualify for a refinance now.

Fact: This plan addresses the needs of those who currently cannot qualify for a refinance under traditional guidelines, because they either don’t have enough equity or because of a credit issues. If you already qualify for a refinance under traditional guidelines, there is nothing in the program that is of added benefit to you. However, if you cannot qualify under traditional guidelines because your loan-to-value is in the 97-105% range or because of a low credit score, this program may help you refinance. The Canto Team is set up to help you with the plan’s new refinance program – the DU Refi Plus, which allows up to 105% LTV (loan-to-value). If you’re not sure how much equity you have or what you qualify for, call a Home Loan Expert now at (888) 724-7402 to find out.

Myth: Servicers will be able to quickly modify or refinance loans; you must work with your servicer to refinance.

Fact: We may be able to help you now. There’s been a lot of consolidation in the mortgage industry, and many of the large servicers do not have the bandwidth to handle the massive volume of calls. Many servicers only service loans; they do not have the resources or technology to refinance loans. If you call us, we’ll walk you through each option and help you make the best financial decision for your situation.

At The Canto Team, our goal is to make sure you’re always in the best mortgage for your financial situation. To find out how you can get a low rate on a 30-year fixed and a lower mortgage payment with the Making Home Affordable plan, call us now at (888) 724-7402 or fill out our short form and we’ll get in touch with you right away.

Or watch the video about the Making Home Affordable plan for a great explanation of the plan and how it can help millions refinance to a lower mortgage rate and payment.

For anyone currently in an FHA loan that could benefit from a lower mortgage payment, The Canto Team offers FHA streamline, the easiest way to refinance your FHA loan. With FHA Streamline, you could refinance an FHA loan with no appraisal and no income/assets verification. Not sure if an FHA Streamline is right for you? Find out if you qualify for an FHA Streamline refinance in just a few easy steps

Figuring out how much your home is worth can be tricky if you don’t know where to start. Several factors impact your home value.

Make sure to have your home appraised by a professional. Look at listings of homes for sale in your area, and those that have recently sold. Your home value should fall in line. Try using a home value calculator; it can give you a good idea of what your home is worth in minutes.

What’s the difference between an appraisal and a comparative market analysis? Good question!

An appraisal is a certified appraiser’s calculation of the value of your home at a given point in time. In order to get the approximate value of your home, the appraisal takes into consideration such things as:

• Your home’s square footage
• Construction quality
• Home design
• Your home’s floor plan
• The neighborhood your home is located in
• Availability of transportation, shopping and schools
• Lot size, topography, view and landscaping

Where can I get the approximate value of my home?

A comparative market analysis is more of an informal estimate of your home’s market value. A real estate agent makes an analysis based primarily on sales of comparable homes in the neighborhood. Compared to home appraisals, which typically cost between $200 and $300, a comparative market analysis may be obtained at no cost.

What’s the difference between the estimated value of my home and my house worth?

While a home’s “estimated value” is most commonly determined by either an appraisal or a comparative market analysis, its “worth” is ultimately established by what prospective buyers are willing to pay for it.

Can I find the value of my home through the Internet?

Use our affiliate’s Home Value Calculator to get home value estimates. There are also a number of other websites and services that can calculate the market’s activity and calculate your home’s estimated value.

However, these calculators rely on recent home sales and refinance transactions in your area to produce an estimated value, only an appraisal or comparative market analysis can provide you with the most accurate assessment of what your property is worth.

Which home loan is right for you when you refinance? Learn how mortgages work and the difference between fixed-rate, adjustable-rate and interest-only home loans.

Refinancing can get you a lower mortgage payment and lower interest rate on your home loan. Locking into a fixed-rate mortgage can insure your payments stay the same.

Q. Should I refinance?

If you’re in an adjustable rate mortgage, you may want to think about getting a fixed-rate mortgage.

Sometimes it makes sense to refinance. Sometimes it does not. It depends greatly on your individual situation and what your financial goals are. For instance, you may want to lower your interest rate and/or monthly payment, but you need to ask yourself some questions:

• How long do you expect to be in your home?
• How much equity do you have in your home?
• Are you willing to pay points to get a lower rate?
• Can you benefit from a lower mortgage payment and extremely easy refinancing with an FHA loan? Find out if you qualify for an FHA Streamline refinance by answering a few simple questions.
• Will having lower payments more than make up for the closing costs, fees and points if any?

Q. Should I refinance from an adjustable rate to a fixed rate?

Generally, it’s a good idea to get the lowest fixed rate possible, but you also have to consider your situation. If you’re in the first year of an adjustable rate mortgage (ARM) and you plan on moving in three years, it probably doesn’t make sense for you to refinance. However, if the rate on your ARM is about to adjust and you think the rate will go up, then it may make sense to get a long-term fixed-rate mortgage, especially if you don’t plan on moving in the next seven years or so.

Q. Are interest rates higher for a cash-out refinance?

The interest rate you pay on a cash-out refinance loan will generally be the same as what you pay on a mortgage where you don’t take cash out. There may be an incremental fee associated with a cash-out refinance loan depending on the specific loan you choose and the loan-to-value ratio. Using the equity in your home to pay off other bills can be a smart thing. Consider taking some money out to pay off high-interest credit cards bills, auto loans and any other debts you have that have non-tax-deductible interest. Please consult your tax advisor to find out whether you may be able to deduct the interest on your new loan.

Q. When should I “lock in” an interest rate?

Nobody can predict what interest rates will do. But historically, rates rise faster than they come down. So if you’re thinking about buying a home or refinancing your mortgage, lock in your rate now-you can always refinance later if rates drop again. Any near-future drop in interest rates may not be drastic enough to impact your monthly mortgage payment. Of course, every situation is different, so it’s important to consider all of your options.

Q. Should I pay points to get a lower rate?

Paying points may or may not be your best option, depending on what you’re doing. Points paid on a loan you’ve refinanced can be deducted from your taxes only in small increments-1/30th a year for a 30-year mortgage, for example. This means it could be several years before your lower rate makes up for the points you pay. However, if you’re buying a home, points paid are a tax-deductible expense for that year. Please consult your tax advisor.

Q. Are there really loans with no closing costs?

There are few loans that truly have no closing costs. Sometimes lenders may not charge application fees and agree to pay the appraisal and title fees, but they may increase the interest rate in return. Lenders can also roll the costs into the amount of your loan. So, because you’re not paying costs up front, it’s called a “no closing cost” loan. While slightly increasing your mortgage might be acceptable to you, keep in mind that it’s not really a cost-free loan.

Q. How long does it take to refinance?

With The Canto Team, refinancing normally takes between two and four weeks, depending on a few things:

• Do you have a recent home appraisal?
• Are you in an area that appraisers can get to easily?
• Are there plenty of other comparable homes in your neighborhood?

Usually, getting the home appraisal is what slows the process down the most. During refinancing booms, appraisers can be difficult to schedule. Also, having your paperwork ready helps to speed the process along much faster.

Q. How much money will I need to bring to the closing?

A general guideline is that you’ll need two percent of the home’s purchase price for prepaid interest to cover the time between the date you close your loan and the date you make your first mortgage payment. Some states may also require pre-payment of property taxes. When refinancing however, your old mortgage will most likely have money in an escrow account that can cover these costs. Some borrowers get short-term loans while their escrow transfers back to them, but most pay the money at the closing knowing they’ll get it back when their escrow is returned.

If you are wondering whether refinancing your loan is right for you, try using our Refinance Calculator or call us at (888) 724-7402 to talk to a refinance expert or click the button below and a refinance expert will contact you

Lower interest rate? Need cash? Refinance your mortgage for the right reasons. Check out these five refinancing opportunities. Lower your payment and make your finances work for you! What are your financial goals? Know those, and you’ll know if and when you should refinance your mortgage.

When interest rates change in your favor, you may want to refinance. More importantly, what’s your situation? How long do you expect to be in your home? What types of financial goals do you have? What kind of mortgage do you have now? Read on to learn more.

1.     Refinance from an Adjustable Rate Mortgage (ARM) to a Fixed-Rate

It’s important to consider what mortgage rates are doing. Are mortgage rates rising or falling? If you have an adjustable rate mortgage (ARM), there is a good possibility it will adjust to a rate that’s higher than a fixed-rate mortgage. If your ARM is ready to adjust or within the next 12 months, now might be a good time to consider refinancing to a fixed-rate loan.

However, you should consider the amount of time that you are planning on being in your home. If you’re going to be in your home for a few more years, it may make sense not to refinance out of your ARM. If you’re going to be in your home longer than seven years, you might do yourself a favor to refinance to a fixed-rate mortgage.

2.     Refinance from a Fixed-Rate Mortgage to an ARM

Again, you need to consider how long you plan on being in your home. Many families and individuals move within the first 7 years so it may not make sense to pay a higher interest rate for a 30-year fixed-rate mortgage when you’re not likely to be in the home that long. Doing so may and sometimes will cost you money. Leanring and understanding your financial goals will help you to determine to refinance to an ARM – you’ll get a lower rate and lower your monthly mortgage payment significantly.

3.     Lower Your Monthly Mortgage Payment

A drop of just one half to three quarters of a percentage point in interest can lower your monthly payment. If you don’t refinance, you may be paying too much every month for your loan, and that’s never a good financial move. There are a few different ways you can lower your monthly mortgage payment.

First, you can simply refinance to a lower interest rate. A lower rate typically means a lower monthly payment.

Second, you can change the term of your mortgage. For instance, if you have a 15-year mortgage, you can lengthen the term to 30 years. Since the balance of your mortgage is spread out over a longer period of time, your payment is lower. However, if you have a 30-year mortgage and one of your financial goals is long-term savings, you may want to consider shortening your term to 20 or even 15 years. Your payment will be higher, but you will pay much less in interest over the life of the loan, saving you thousands of dollars in the long run.

The third way to lower your payment is to refinance to an interest-only loan. Basically, with an interest-only loan, the minimum amount you are required to pay is the amount of interest for a certain period of time, though you can pay as much principal as you like. But you get the option to pay less if you need or want to divert your money elsewhere, such as contributing to your investment and/ or savings accounts, or saving for your child’s college tuition.

4.     Getting Cash from Your Home

The equity you have in your home can act like a savings account that you could access through a home equity loan or a cash-out refinance. This is usually done when you want to finance an important home improvement, pay for college or pay off high-interest credit card debt. Whatever your reason, this may be the right option for you.

5.     Consolidating High-Interest Credit Card Debt

The difference between credit card debt and a mortgage can, financially speaking, mean thousands of dollars. Why? Because unlike your mortgage, the interest you pay on a credit card is not tax-deductible and you pay a higher rate than you would on your mortgage. Because of this, credit card debt is often referred to as “bad debt” whereas your mortgage is considered “good debt.” Using your home equity to pay off your high-interest credit card debt can save you money in the long run. Using your home equity, rather than your credit cards, to finance expensive purchases can also be a smart move. Be sure to consult your tax advisor. Trust us on this. Don’t deduct and just cross your fingers for good luck. Know what you are doing before you mess with your taxes!

Deciding on when to refinance your mortgage will depend on the circumstances of your situation: how long you’ll be in the home, what your financial goals are, whether interest rates are dropping, etc. It’s up to you to decide if it’s right for you.

If you still have questions, please call us at (888) 724-7402 to talk to a refinance expert today. We can help you determine which refinancing option is best for your situation.