Yale Roth M.A., M.Ed

If you haven’t considered refinancing your mortgage, or if you haven’t refinanced your mortgage in the last 2 years, you really ought to consider refinancing now.

The top mortgage loan types to refinance into in 2012 are as follows:

1. 10 Year Fixed Mortgage

This mortgage rate is fixed for 10 years, after which time the mortgage loan will be paid off.  The mortgage rates for the 10 year fixed are remarkably low.

This mortgage type, although having a bigger principal and interest payment because of the short mortgage term, is the cheapest mortgage loan type available.

The net effective mortgage rate is exceedingly low, you’ll save money in total mortgage interest paid, and the mortgage loan will be paid off sooner, saving you thousands of dollars in mortgage payments that you WON’T be making!

It’s definitely worth looking into refinancing into the 10 year fixed mortgage.

2. 15 Year Fixed Mortgage

If the mortgage payment for the 10 year fixed mortgage is too high or exceeds your budget, consider the 15 year fixed mortgage.

Like the 10 year fixed mortgage, the 15 year fixed mortgage is an equity builder.

Beginning with your first mortgage payment, 50% of that principal and interest payment goes to lowering the principal balance of the mortgage loan.

The mortgage rate and mortgage payment are fixed for 15 years and the mortgage loan will be paid off in 15 years!  If you can swing the mortgage payment, you want to look at refinancing into the 15 year fixed mortgage.

Oh, by the way, the mortgage rates for the 15 year fixed, like the 10 year fixed are at historic lows!

3. 30 Year Fixed Mortgage

The 30 year fixed mortgage is the old stand by.

If you plan on keeping your home for the long term and if the mortgage payment for the 15 year fixed and 10 year fixed are outside your budget, then consider refinancing into a 30 year fixed mortgage.

The mortgage rate and mortgage payment are fixed for 30 years and the mortgage rates are also at historic lows!

You can prepay against the 30 year mortgage if you want to speed up equity buildup as well, so there is mortgage payment flexibility.

4.  7/1 Adjustable Rate Mortgage ARM

The 7/1 ARM is best if you plan on keeping your home for a period less than 7 years.

If that’s the case, and you don’t want to make a higher mortgage payment with a 15 year fixed mortgage or 10 year fixed mortgage, then the 7/1 ARM is a strong refinance contender.

The mortgage rates for the 7/1 ARM are very, very low and the mortgage rate and mortgage payment are fixed for 7 years.  The mortgage loan is amortized over a 30 year period so the mortgage payment will be low. 

You won’t build up a lot of home equity, but the mortgage payment and mortgage rate will be lower than the 30 year fixed mortgage.

Depending on your goals, these 4 mortgage loan types are the mortgage loans you want to consider if you haven’t refinanced your mortgage in the last 2 years.

Related Posts:

• My Top 3 Mortgage Loan Types
• Why A 7/1 ARM Can Be A Smarter Mortgage Choice Than A 5/1 ARM
• Does It Make Sense To PrePay Your Mortgage?
• Why Prepaying Your Mortgage Loan Is A Good Alternative To Refinancing
• Why A 5/1 ARM May Be A Smarter Mortgage Loan Choice Than A 10 Year Fixed Mortgage