Baltimore is one of the largest cities in Maryland , with a lesser known city on its outskirts called Towson . Two brothers founded Towson , Maryland in 1750. Today, Towson is home to more than 52,000 residents and Notre Dame Preparatory School . With Baltimore bustling just a few miles away and the city itself growing, it’s a wonder more people haven’t found their way to Towson . For those who have already purchased a home, but may need to lower your monthly mortgage payments or wish to obtain the equity from your home, then you will want to know the options you have available.
There are two options you have when looking at changing your mortgage. You can refinance your existing loan or obtain a home equity line of credit. A home equity line of credit or home equity loan is a second mortgage to gain you money at the end of the transaction for use towards your expenses or maybe another investment property. Refinancing takes your existing loan and pays it off with a new mortgage.
First we will look at home equity loans. Equity is the appraised value of your home minus the amount owed on your existing loan. Equity can change over time. There are many factors that play apart in what your house will appraise for, an example is the neighborhood you live in. If the homes are newer and selling for higher prices than you will most likely have a higher equity available especially if you have made improvements over time. Like wise if the neighborhood is older and the homes on the street have not been fixed up your home may not appraise for the amount you think it is worth. The economy and real estate market also have an effect on how much your home might appraise for. Researching your area and what homes have recently sold for will give you an idea of how much equity you can expect to gain from a home equity loan. As stated above this is a second mortgage so you will still have the first mortgage to pay off as well. Benefits come from the equity you gain once you close on the second loan. This equity can help payoff higher interest debts like credit cards or you can reinvest it in a second property. Rentals may be a good idea in your area or you may just want a vacation home. Whatever the reason this loan is available for those who have a significant amount of equity.
The second option mentioned is refinancing. Refinancing takes your existing loan and pays if off. This is helpful when the market has a lower interest rate than the original loan. You ca save quite a bit in interest in you take advantage of the lower rates and it will also help lower your monthly payments if you need a helping hand. Another benefit of refinancing is including other debts in the new loan. This is consolidation or streamlining your expenses into one monthly payment with a set interest rate. Part of refinancing may come from having an adjustable rate mortgage where the interest rate has exceeded the market rate and made the monthly payments to outrageous to pay. Refinancing can get you into a fixed rate mortgage with a fixed interest rate and steady monthly payments.
Refinancing will net you one loan with a set interest rate lower than your previous mortgage, but it does not give you a balance at the end of the transaction. The lender in a sense will pay off your other debts if you’ve consolidated. A home equity loan will net you the equity from your house, but you will gain another mortgage payment. Knowing which expense will help you is important when speaking with a mortgage professional an they will help you decide which option suits your needs best.
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