There are many factors to consider when acquiring a home loan refinance mortgage. You need to be aware of several key factors including current interest rates, credit scores, bank requirements and closing costs. You should also get general refinancing information about products available such as adjustable rate mortgaged (ARM), Home Equity Lines of Credit, 30 year fixed rate mortgages, 15 year fixed rate mortgages, and negative amortization loans or pay option arms.
The first thing you should do is some quick research regarding the prevailing interest rates in your area. These can vary wildly from state to state and even from city to city so you may need to spend some time on this. Once you determine what interest rate is available you will have a good starting point to acquire even more refinancing information.
To know what interest rate you will qualify for when you apply for a home loan, you need to know what your credit score. There are some online sites that advertise free credit reports but you can get a free report just by writing to and requesting one directly from one or all three of the major credit reporting agencies: Experian, Equifax, or Transunion. By law they have to provide you with a free copy of your credit report when you inquire.
You can go to your favorite broker or lender and find out about all of the mortgage products they have available right now including adjustable rate mortgages (ARMs). ARMs are mortgages that are usually fixed for a certain time, usually from between 3 and 5 years (interest only payments). After the fixed period the interest rate will change monthly depending on what index the interest rate is tied to. The most commonly used indexes are the Libor (London Interbank Exchange) or Prime Rate.
Most qualified homeowners will opt for more conservative loan products such as a fully amortized (principal and interest) 30 year fixed rate mortgage loan. You can also choose a 15 year loan if you want to pay your loan off quicker and save all that money on interest and finance charges. Although most states have banned negative amortization loans, also known as Pay Option ARMs, you should try and find as much refinancing information on this product in order to avoid it.
Refinancing information is readily available from the HUD website and also from your state department of real estate website.