## Can You Change Your Fixed-Rate Mortgage?
A fixed-rate mortgage (FRM) is a type of loan in which the interest rate remains the same for the entire term of the loan. This is in contrast to an adjustable-rate mortgage (ARM), in which the interest rate can change periodically.
There are several reasons why you might want to change your fixed-rate mortgage. For example, you may want to:
* **Lower your interest rate.** Interest rates have been declining in recent years, so you may be able to save money by refinancing your mortgage at a lower rate.
* **Shorten your loan term.** If you can afford to make larger monthly payments, you can shorten your loan term and pay off your mortgage sooner. This can save you money on interest in the long run.
* **Change your loan type.** You may want to switch from a fixed-rate mortgage to an ARM if you expect interest rates to continue to decline. This can help you save money on your monthly payments in the short term.
**Is it possible to change a fixed-rate mortgage?**
Yes, it is possible to change your fixed-rate mortgage. However, there are some important things to keep in mind.
First, you will need to refinance your mortgage. This means that you will need to get a new loan from a lender. The new loan will have a different interest rate and loan term than your current loan.
Second, you will need to pay closing costs. Closing costs are the fees that you pay to complete the refinancing process. These costs can include:
* **Loan origination fee:** This is a fee that the lender charges to process your loan application.
* **Appraisal fee:** This is a fee that the lender charges to have your home appraised.
* **Title insurance:** This is a type of insurance that protects the lender in the event that there are any problems with the title to your home.
* **Recording fee:** This is a fee that the lender charges to record the new mortgage with the county recorder.
The total cost of refinancing your mortgage will vary depending on the amount of the loan, the interest rate, and the loan term. You can get a good estimate of the closing costs by talking to a lender.
**Should you change your fixed-rate mortgage?**
Whether or not you should change your fixed-rate mortgage depends on your individual circumstances. If you are considering refinancing your mortgage, you should carefully weigh the pros and cons.
Some of the benefits of refinancing your mortgage include:
* **Lower interest rate:** You may be able to save money on your monthly payments by refinancing at a lower interest rate.
* **Shorter loan term:** You can shorten your loan term and pay off your mortgage sooner by refinancing. This can save you money on interest in the long run.
* **Change your loan type:** You may want to switch from a fixed-rate mortgage to an ARM if you expect interest rates to continue to decline. This can help you save money on your monthly payments in the short term.
Some of the drawbacks of refinancing your mortgage include:
* **Closing costs:** You will need to pay closing costs to refinance your mortgage. These costs can be significant, so you should factor them into your decision.
* **Credit score:** Your credit score will be checked when you refinance your mortgage. If your credit score is not good, you may not be able to qualify for a lower interest rate.
* **Prepayment penalty:** You may have to pay a prepayment penalty if you refinance your mortgage before the end of the loan term. This penalty can be significant, so you should factor it into your decision.
If you are considering refinancing your fixed-rate mortgage, you should talk to a lender to get a good estimate of the costs and benefits. You should also carefully weigh the pros and cons before making a decision.
## Options for Changing Your Fixed-Rate Mortgage
There are several different options for changing your fixed-rate mortgage. The best option for you will depend on your individual circumstances.
**Refinancing**
Refinancing is the most common way to change your fixed-rate mortgage. When you refinance, you get a new loan from a lender. The new loan will have a different interest rate and loan term than your current loan.
There are two main types of refinancing:
* **Rate-and-term refinancing:** This type of refinancing allows you to change the interest rate and loan term on your mortgage. You can use rate-and-term refinancing to lower your interest rate, shorten your loan term, or both.
* **Cash-out refinancing:** This type of refinancing allows you to take out cash from your home equity. You can use cash-out refinancing to pay off debt, make home improvements, or invest in other opportunities.
**Modifying**
Mortgage modification is another option for changing your fixed-rate mortgage. When you modify your mortgage, you change the terms of your loan without getting a new loan. This can be a good option if you are having difficulty making your mortgage payments.
There are several different types of mortgage modifications, including:
* **Interest rate reduction:** This type of modification lowers the interest rate on your mortgage. This can help you lower your monthly payments.
* **Loan term extension:** This type of modification extends the loan term on your mortgage. This can help you lower your monthly payments.
* **Forbearance:** This type of modification allows you to temporarily stop making payments on your mortgage. This can help you if you are experiencing financial hardship.
**Selling**
If you are unable to refinance or modify your fixed-rate mortgage, you may need to consider selling your home. This can be a difficult decision, but it may be the best option for you if you are unable to make your mortgage payments.
## How to Change Your Fixed-Rate Mortgage
If you have decided that you want to change your fixed-rate mortgage, there are a few steps that you need to take.
1. **Get a pre-approval letter.** A pre-approval letter from a lender will show you how much you can borrow and what your interest rate will be. This will help you narrow down your options and make the best decision for your needs.
2. **Shop around for lenders.** Compare interest rates and fees from multiple lenders to find the best deal.
3. **Complete a loan application.** The loan application will ask for information about your income, debts, and assets.
4. **Get an appraisal.** The lender will order an appraisal to determine the value of your home.
5. **Close on your new loan.** Once the loan is approved, you will need to sign the closing documents and pay the closing costs.
## Conclusion
Changing your fixed-rate mortgage can be a complex process, but it can also be a good way to save money or improve your financial situation. If you are considering changing your mortgage, it is important to talk to a lender to get a good estimate of the costs and benefits.