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Many factors such as credit qualification, loan flexibility, and annual percentage rate (APR) contribute to the final decision of what type of mortgage loan best fits your goals.

Millions of American homeowners pursue the lowest possible monthly mortgage payment as a precaution. They have one goal when it comes to their mortgage – enjoy the lowest possible monthly payment.

But that’s not always the case for every homeowner.

Many homeowners chose to actually add money to their monthly payment to decrease the principal balance of their loans at a much faster pace.

These same homeowners, when refinancing, usually select a lower interest rate and shift from a 30-year fixed to a 15-year fixed.  This rapid payment process allows borrowers to:

• Pay off the principal balance faster
• Lock in on near-record-low interest rates
• Shorten the length of their home loan
• Own their home faster
• Pay substantially less mortgage interest

The homeowners who have employed this trend are now identified as “equity builders.”

They accept a higher monthly payment to take advantage of the five benefits listed above.

The higher monthly payments may seem a bit extreme to some borrowers, but according to bankrate.com, cash-in refinancing is growing in popularity among equity builders.

Also, according to Stuart Feldstein, president of SMR Research Corp., “The rationale for equity building when foreclosure isn’t a threat is simple.  The future interest payments homeowners can forgo by reducing the length of their loan or pumping cash into the deal is greater than what they would otherwise earn in safe investments such as a bank account or money market fund.”

Recent data collected from CoreLogic Inc. suggests, borrowers who refinanced in January into a 15-year fixed ( 29%), is up nearly triple the amount of those who did the same two years ago (11%).

Accordingly, the same data suggests numbers are down 28%t for those who refinanced into a 30-year fixed in January, as opposed to two years ago.

With regard to these equity builders Feldstein stated, “They are people who, rather than wait for home values to rise, are taking matters into their own hands, they are building equity on their own.”

Here’s a little QL self-promotion: One way to take advantage of this equity building trend is the YOURgage loan.

Borrowers who choose the YOURgage customize their payment terms based on their goals.  This loan option allows borrowers to take advantage of a low interest rate while paying off their loan with a fixed term they choose – anywhere from 8 to 30 years. With the YOURgage, you can choose a 19-year fixed loan if that works best for you. Or a 27-year fixed. Or an 11-year fixed. And the lower the term, the lower the rate. This is the ultimate in home loan flexibility.

The bottom line? Everyone doesn’t have to wait for housing prices to rebound to take advantage of today’s market. They can become an equity builder – get a shorter term with a (often record) lower interest rate and take matters into their own hands.

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