Mortgage Refinance Loans

Loan refinancing is a process that allows you (a homeowner/borrower) to replace your current mortgage loan with a new one. In most cases, a mortgage refinance loan comes into play when you are looking for new terms (typically better than existing/previous terms). A refinance loan may also help you reduce your monthly payments. When loan rates are low, it's an excellent opportunity to refinance. A new mortgage loan/refinance can result in a shorter term of your mortgage. Which ultimately means you pay significantly less in interest payments.

Benefits Of Refinancing:

• Lowering Your Interest Rate: When rates are dropping, you can secure a lower rate to help you save on interest.
• Better Loan Term: If you change/reduce the term on a mortgage loan, it can help you achieve specific financial goals. If you plan to pay off your loan early, a short term may help you avoid penalty clauses. And of course, the shorter the term that less you pay in interest over the life of your loan.
• Debt Consolidation: Debt consolidation loans help you settle debts so you can streamline your finances with one regular payment. As the name suggests, you consolidate all your debts into the one loan, so you only have one payment to make each month.
• Cash-out Refinance: Cash-out refinance lets you convert home equity into cash. In cash-out refinance transaction the new loan amount exceeds the total of the principal balance of the existing first mortgage. You can then use this extra cash to renovate your home, upgrade kitchens with new appliances, flooring, better bathrooms and even a new house paint. You can also use a cash-out refinance to reduce debt, fund a business, finance a large purchase or pay student loan.
• Mortgage Consolidation: Converting multiple mortgages into one mortgage can make repayment simpler and potentially save you money.
• Pay Off Your Loan Sooner: With a shorter loan term, you can potentially save thousands of dollars over the life of your loan. These potential savings might be used towards other priorities, boost your savings account, or contribute more to your retirement fund.

Types of Refinance

• Rate And Term Refinance
• Cash-Out Refinance
• Cash-In Refinancing
• Consolidation Refinance

Home Refinance Options

Conventional Loan Refinance

Mortgages can be either government-backed or conventional. Conventional loan is not made by a government entity nor insured by a government entity. They are also called as non-GSE loans. Conventional loans typically cost less than government-backed loans but can be more difficult to get. A conventional loan is any mortgage loan that is not insured or guaranteed by the government (such as under Federal Housing Administration, Department of Veterans Affairs, or Department of Agriculture loan programs). Conventional loans can be conforming or non-conforming. A conventional loan is a perfect mortgage for home buyers that have very good to excellent credit. Conventional mortgages usually require a minimum down payment of 5% to 20%, while some government programs require smaller, or in some cases, zero down payment.

VA Refinance

A VA (Veterans Affairs) loan carries many of the same advantages as an FHA home loan. However, to qualify for this loan, you must be a qualifying veteran, the unmarried widow of a veteran, a Public Health Service Officer, or an active-duty service man. VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms. In most parts of the country, the maximum loan amount for a VA-guaranteed loan is $417,000 without putting any money down; however, with the 2013 VA Loan Limits, borrowers in high-cost counties may be able to purchase homes far exceeding that amount without a down payment. Go to https://www.va.gov for more information on VA loans.

You could also do a VA cash-out refinance, which works similarly to a regular conventional cash-out refi. Unlike a conventional refinance, a VA cash-out may allow you to withdraw all your equity without leaving 10% to 20%. Though some lenders may require that you have a certain minimum credit score to do this.

FHA Streamline Refinance

A FHA loan, backed by the Federal Housing Administration, may be a good option for borrowers with a smaller down payment or lower credit score than those required for a conventional loan. An FHA Loan (Federal Housing Administration) has some more advantages over conventional loans. Since the government insures FHA loans, they generally have more lenient qualification requirements, lower down-payment requirements, and they are assumable loans. The maximum loan amount for an FHA loan (single-family) ranges depending on the county where you live. You can contact a mortgage specialist for these maximum amounts for your specific county. Government loans (including the FHA loan) make up 20 percent of residential mortgages in the U.S. An FHA Loan (Federal Housing Administration) has some advantages over conventional loans. Go to https://www.hud.gov for more information on FHA and other government loan options.

To refinance an FHA loan on a primary residence, typically you will need a minimum credit score of 580 - 620, again depending on your lender.

USDA Rate/Term Refinance

The United States Department of Agriculture (USDA) offers a loan program for rural borrowers who meet certain income requirements. The program is managed by the Rural Housing Service (RHS), which is part of the Department of Agriculture. RHS works with other federal agencies, and a number of both nonprofit and private organizations nationally, in order to pool resources to help America's rural residents most effectively. RHS administers direct loans, loan guarantees and grants to "rural residents who have a steady, low or modest income, and yet are unable to obtain adequate housing through conventional financing." Income must be no higher than 115% of the adjusted area median income [AMI]. The AMI varies by county.

USDA loans allow you to go for rate and term refinances (no cash-out option). The USDA refinance program allows borrowers to refinance quickly with little to no equity required and no mandatory appraisal (almost same as FHA Streamline Refinance)

Is refinancing your best option?

Refinancing can be a great financial move if it reduces your mortgage payment, shortens the term of your loan, or helps you build equity more quickly. However, since refinancing can cost X% of a loan's principal, requires an appraisal, title search, and application fees, it's exteremely important for the borrower to look into the options very carefully and determine whether refinancing is a something that you should go for.

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