Are you thinking of refinancing?
You might have bought a starter home or property at a time when mortgage rates were higher than they are now. You wanted to reap the benefits of lower rates and a more substantial monthly payment. You may have even put off buying the home of your dreams.
However, refinancing to a lower rate may be your saving grace in terms of debt, purchasing power, and financial success. We’ve got the information you need to make a well-informed choice.
Read on to learn more about refinancing options for your home.
1. Rate-And-Term Refinance
A rate-and-term refinance loan replaces your current mortgage with a new loan that has a lower interest rate over the same term. This type of refinance doesn’t typically give you any additional cash above and beyond what you already owe on your home. They are common when homeowners refinance from a 30-year mortgage to a new 30-year mortgage to secure a lower interest rate.
2. Cash-Out Refinances
A Cash-out refinance lets you tap into your home equity to get cash for debt consolidation, home improvements, or other expenses. You refinance your mortgage for more than you currently owe and take the difference in cash.
You could also refinance for a lower rate and term to save on your monthly payments. They usually have higher interest rates than regular refinances because they are considered to be riskier.
3. USDA Refinance
The USDA (United States Department of Agriculture) refinance program is a government-backed initiative that allows homeowners with USDA-backed loans to refinance their mortgages at a lower interest rate. This program can help save homeowners money on their monthly mortgage payments, as well as provide them with additional equity in their homes.
To be eligible for this program, homeowners must meet certain criteria. This includes having a good payment history on their existing loan and being current on their mortgage payments.
4. FHA Refinance
FHA (Federal Housing Administration) refinances are available to homeowners who currently have an FHA loan and would like to lower their monthly payments, get a lower interest rate, or change their loan term. The program is also designed to help people with FHA loans pay off their mortgages faster.
You can also use the program to get cash out of your home equity to make home improvements or pay off debt. The program is available to anyone who has an FHA loan, and there are no minimum credit score requirements.
5. VA Streamline Refinance
A VA Streamline Refinance is a mortgage loan product that is available to eligible veterans and service members. This product allows them to lower their monthly mortgage payments and/or interest rates with minimal documentation and without having to refinance their existing VA loans.
To be eligible, the borrower must be current on their existing VA loan and must make at least six months of on-time mortgage payments. You can look here for more information about refinancing options.
Practical Refinancing Options
There are many refinancing options available for homeowners. Depending on your goals, you can choose to refinance with a lower interest rate, cash out equity, or shorten your loan term.
Talk to your lenders and compare rates to find the best option for you. Don’t forget to shop around for the best deal and ask questions to make sure you understand the process.
To learn more about refinancing, house improvement, and everything in between, take a look at some of our other articles.