There are several options and reasons for refinancing your home. To be sure it’s the best fit you’ll want to work with the best lending professionals here at Total Lending Concepts. The following will provide you with guidance and basic information to start the refinancing process.
Basically, a refinance is a way to pay off your mortgage with a new mortgage to achieve certain results. Some of these results include a lower interest rate, a fixed-rate, shorter terms, or obtaining some funds through your equity. Before refinancing, be sure to think about the results you want since it could determine the type of refinance you should get. There are several common choices for a refinance including conventional, FHA, VA, and USDA. Here are the most common options:
–> A standard refinance will allow you to obtain a lower interest rate. The downside to this is you can’t take cash out of your equity. Depending on your original loan’s interest rate, if the current rate has dropped more than a percentage point, or change terms from 30 to 15 years, it may be worth the long-term savings. You will need to qualify for the loan, which will look at your credit score, loan-to-value ratio, and current loan program.
–> Cash-Out refinances will allow you to borrow up to 80% of your home’s current value, which may need to be assessed professionally. VA Cash-out refinances often allow you to borrow more. Most often, cash-out refinances are used to pay off high-interest debt, pay for home renovations, or other large expenses. You will also need to qualify for this loan program.
–> Government backed loans including FHA, VA, and USDA loans may use a streamlined refinance program. These programs don’t require the same qualifications as other refinancing loans. This includes no checking of your income, assets, or credit score. These refinance options are usually used when a borrower is upside down on the loan and want better terms on their loan.
Another Reason for a Refinance
While your mortgage may not be of concern, you may want to consider a refinance if you have a significantly higher credit score if interest rates are lower than you current mortgage. Not only will you receive a lower interest rate, you’ll have a lower mortgage payment. Some borrowers opt for this, then continue to pay their previous mortgage payment amount to pay off their new mortgage sooner.
Are you thinking about refinancing? We have options to help you save money, tap into your home’s equity, and get the most affordable solution for your home. CONTACT US TODAY for more information.