Refinancing Provides Financial Options for Denver Residents

By Karen Lawson
Local Lender Columnist
May 26, 2008
Typically, homeowners refinance to lower adjustable rate mortgages or fix their current mortgage rates. Depending on the terms of your existing mortgage, and your financial needs, refinancing can provide additional benefits for Denver homeowners:

Eliminate ARM features

Refinancing to a fixed rate mortgage (FRM) eliminates adjustable rate mortgage (ARM) terms and changing interest rates. An FRM stabilizes principle and interest (P&I) and is fully amortized, that is, your payments are structured to fully repay the mortgage during the life of the loan.

Start Paying Down Your Mortgage

If you're currently making interest only payments or payments that are less than your fully amortized payment, refinancing to an FRM will help you start reducing your mortgage balance. If you need lower payments for the first few years of your mortgage term, don't worry. An interest-only or option ARM can get you into a house now, assuming that in the near future you will be able to make a fully amortized, higher payment. Although this type of mortgage can help you buy a home, it's a good idea to refinance to eliminate negative amortization or interest only payments when possible to avoid the erosion of your equity.

Cash Out Refinancing Provides Financial Flexibility

If you have enough home equity, you may qualify for cash-out refinancing, which means that you replace your existing mortgage with a larger one and receive an additional cash payment. Carefully consider cash out refinancing--if you've accumulated too much high interest debt or have major unplanned expenses, cash-out refinancing may help. Cash-out refinancing can also fund home improvement projects that may ultimately add value to your home.

Denver area mortgage lenders and real estate professionals can provide information about current home values, home equity, and refinancing options.

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds a Master's degree in English from the University of Nevada, Reno.