A New Home Mortgage vs a New Home

By Sheryl Landrum
LoanPage.com Columnist

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With the recent decline in home values, many potential home buyers are nervous about buying a new home. However, mortgage interest rates are dropping, making it the perfect time for a new home loan. So if you have been thinking of improving your living conditions by buying a bigger or nicer home, consider improving your existing house instead by refinancing with a new home mortgage or getting a home equity line of credit or home equity loan.

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Which Financing Fits Your Needs?

First, you need to determine which loan option is best for you. In order to choose the best loan option you need to know:

» What is the current interest rate on your existing mortgage? Is it higher than what is available today?
» What is your home's mortgage balance and what is your current home value?
» What are your long term plans for the home?
» How much money would you need to borrow in order to make the home improvements you are considering?
» What types of costs and savings will you realize if you refinance or take a home equity loan or home equity line of credit?

The answer to these questions will help you determine which loan type is best for you. Each loan type offers different benefits and has different costs. Consult with a reputable mortgage lender and/or a financial advisor who can help you determine a game plan.

You may want a better home, but that does not necessarily mean you need a new one--remodeling your existing home might be all the change you need. Don't let housing market instability keep you from realizing your dreams. With interest rates as low as they are, you can easily make the changes you want.

About the Author
Sheryl Landrum is a Senior Loan Officer with First Capital Mortgage of San Diego at the Prudential Realty Office in Bonsall, California.

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