If you are a homeowner and looking for a loan product that not only allows you to pay off your home, you might be pleasantly surprised at the many products available under the umbrella of refinancing loans. Refinancing loans in their traditional forms are second loans that allow you to pay off an older loan, using the same property as collateral. Besides this traditional type of loan, there are many others that not only give the homeowner the ability to pay off property, but give alternative ways to pay off these loans that can be extremely beneficial to homeowners – especially financially savvy homeowners.
Two types of loan products that offer alternative payment options are Interest Only Refinancing Loans and Optional ARM Refinancing Loans.
A standard refinancing loan only has one option; pay both the principle of the loan and the interest payment at the same time for a set period of time. Interest only loans allow a homeowner to pay less than the full payment (principle + interest), the homeowner can opt for paying the interest alone. This type of loan can free up cash flow worth hundreds of dollars or in some cases thousands of dollars per month. Extra cash flow for many financially savvy homeowners can help them invest this extra money in things such as their 401K, college tuition for a child or other expenses. In addition, a homeowner that has a seasonal job or career where income can fluctuate, can use the options to lower pressure during the lean times.
The other type of loan that can be also very useful to financially savvy homeowners is the optional ARM refinancing loan. This loan not only allows you to make interest only payments, but also offers a minimum payment option. Minimum payment means that not only can you skip paying the principle of the loan, but you can opt out of paying some of the interest of the loan as well. Sometimes this option is called interest deferred.
It should be noted that besides giving savvy homeowners the option to pay less per month, the optional ARM refinancing loan also allows a homeowner to pay off their loan quicker. It gives the homeowner the ability to pay off the loan in a standard 30 year term or even a 15 year term. The less time it takes to pay a loan off, the less money you need to repay.