Mortgage Loan Options for 2016

Homeowners have several mortgage loan options to choose from in today’s competitive loan market.

Mortgage Refinancing
It is a good time to refinance into a 30-year fixed-rate mortgage loan if you have an adjustable-rate loan. The average rate on the 30-year loan is near its lowest level since October 2005.

If you decide to refinance your mortgage loan, here are five cost-effective steps from financial experts Blair Glenn and George Hanzimanolis:

Home Equity Loans and Lines of Credit
Home equity loans and lines of credit can be great ways to convert equity to cash for everything from home improvement projects to debt consolidation. A second mortgage is secured against the home for either type of loan.

A home-equity loan gives you a set amount of money that you pay back in monthly payments over a fixed period of time, typically 10 to 15 years. The loan can either have a fixed interest rate that you lock in when you get the loan, or it can be an adjustable rate loan.

A home equity line of credit (HELOC) is more like a credit card. You can borrow money whenever you want, up to the assigned credit limit, and you make payments only on what you have borrowed, plus interest.

Non-traditional Mortgage Loans
There are also several types of non-traditional mortgage loans available to homeowners in 2016.

Interest-only mortgages are exactly what the name implies. Monthly payments only cover the interest on the loan.

Payment option mortgages give borrowers up to four monthly payment options: a minimum payment set annually, an interest-only payment, and what would be the standard payment on a 15-year or a 30-year mortgage loan.

Piggyback mortgages combine a standard first mortgage with a home-equity loan or line of credit.

Miss-a-payment mortgage loans let borrowers skip up to two payments a year and 10 payments over the life of the loan without negatively impacting their credit rating.

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