Mortgage Refinance Options

What comes to your mind when you hear mortgage refinancing? For most people mortgage refinance options are those that offer lower interest rates. While this is one of the options, the bigger picture includes more than interest rates.


While getting a lower rate is definitely the primary goal, there are other mortgage refinance options you can make that can maximize your savings to your own particular circumstances.

One of the options you have is to lower your monthly payments. While lower interest rate is one way to go about it, the other way is to extend the current mortgage terms. For example, refinancing into a 40-year loan is one option that many lenders are willing to offer.


As you extend the length of payment, you are at the same time lowering your monthly payment. While this will result in higher interest rates over the long run, it can be a life saver for someone in a tight financial situation.

Another of the mortgage refinance options is to reduce the term of the loan. 15-year loans rates are so low to the point that you can refinance into a shorter term for the same monthly payment and still pay off the loan several years earlier. Going further with this, you can also choose a different loan type.


Refinancing into an adjustable-rate mortgage (ARM) has much lower initial rates than fixed rate loans. If you have property equity, then going for the ARMs is a good refinancing choice. The property equity will allow you to have enough to refinance once the interest resets down the road.

Mortgage refinance options that involve “no-cost” refinancing can also address closing costs on a new mortgage. This refinancing option allows you to roll the closing costs into a new mortgage with slightly higher interest rates than if the closing costs were paid separately.

You save money using the “no-cost” refinance option by ensuring the new monthly payments are less than the older ones as long as the payoff date remains the same. In this way, you will be saving money. You however need to ensure that the lender is not artificially lowering the monthly payments by stretching the loan term. The payoff date should be the same or less. These mortgage refinance options however come with steep early payoff penalties to protect the lender from unnecessary expenses.

Take time to consider your circumstances and the options available for you and select mortgage refinance options that are right for you.