How to Refinance your Home Loan
With mortgage rates currently down, many people are trying to get out from under their high interest rates. Homeowners are always looking for ways to reduce their monthly payment. Many lenders these days make it fairly easy to refinance your current mortgage. Homeowners with FHA loans have an even bigger advantage when it comes to refinancing with the available FHA Streamline option. Here are a few things to consider when you are thinking about refinancing your existing mortgage.
- The top thing to consider is, will there be a net-tangible benefit from refinancing your current home?
- Will you be able to drop your mortgage insurance at the same time of the refinance?
- What is your main reason for looking at mortgage refinance? Lower payment? Make home improvements etc?
What Type Of Mortgage Refinance Is Best For You?
With all the different mortgage refinance options, you need to do your due-diligence to make sure you’re choosing the best one. Some of the refinance options are:
- FHA Streamline Refinance
- VA Streamline Refinance
- HARP Program
- Variable-Rate Mortgage Refinance Loan
- Home-Equity Refinance Loan
- Interest-Only Home Mortgage Refinance Loan
Refinancing your mortgage is essentially paying off your current mortgage to create a new one to gain some sort of benefit or multiple benefits. There are a lot of different scenarios and options when it comes to refinancing.
Typically, if you’re eligible to refinance your loan then you should probably do it. You’ll end up gaining some sort of net-tangible benefit that you didn’t have prior to refinancing. That could result in a lower interest rate, a lower monthly payment or getting some cash in-hand to use for home improvements, pay off some debts or anything else you’d like to use it for.
Traditional Mortgage Refinance
A traditional refinance loan allows you to pay the remaining balance on your mortgage at a typically lower interest rate. In some cases you may even be able to cut down your loan maturity period and still save on your monthly payments. The goal is to have a more affordable mortgage payment. The ideal time to do a Traditional, or Rate-and-Term refinance is when the interest rates are lower than they were when you originally financed your home. This decrease could be due to changes in the prime interest rate, as a result of you building a better credit rating or because you have chosen a lender that was offering better rates.
15 Year Refinance
A 15 yr refinance loan is a good option for people who want to get a lower rate to pay off their mortgage faster. A 15 year refinance will have higher payments in most cases than a 30 year refinance but in the long run it will save you money due to paying less interest. If the interest rates are low, like they are now, you could save tens of thousands of dollars over the course of the loan by refinancing to a lower rate.
30 Year Refinance
Refinancing at a 30 year mortgage is a good option for a homeowner looking to drastically reduce and lower their monthly mortgage payment. Refinancing your existing mortgage into a 30 year loan could save you upwards of over hundreds of dollars a month.
If you’re looking at refinancing your mortgage for the sole purpose of getting cash-out, we have a solution for you. If you need the extra cash for things such as home improvements or even debt consolidation, feel free to take a look at some of the best home refinance companies from some of our trusted referral partners.
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