Most people choose to [url=http://www.mortgagefit.com/refinance.html]refinance[/url] either to get a lower rate compared to what they have received on their existing mortgage or to modify the term of the loan. Besides, they often require extra cash for a variety of purposes and here's where refinance can help them to cash out their equity. This article gives you an idea of the following aspects of refinance:
[list:16cff98493][*:16cff98493]5 ways to refinance your existing loan[*:16cff98493]Loan types to choose for refinance[/list:u:16cff98493]
5 Ways to refinance your loan
- Rate and Term Refinancing
This allows you to borrow enough to clear your current mortgage balance. You can either modify the interest rate on your loan or change the loan term or you may adjust both. For instance, you may change to an FRM when the rate on your ARM is expected to move upwards within a short time. Or else, you may switch over from an FRM to a hybrid ARM if you plan to move out within a period of 2 to 3 years.
- Cash-out Refinancing
This is one of the home refinancing options which will leave you with excess cash amount after you have paid off the current loan balance. You can thus extract cash proceeds from your home equity. Know more...
- Streamline refinancing
Streamline refinancing refers to the documentation and underwriting carried out by a lender in order to find out if the borrower would qualify for a refinance loan. This is a kind of loan program does not require any credit verification. But it may or may not require an appraisal. There are two types of streamline refinances - one offered by the FHA and the other by the VA. Know more...
- Mobile home refinance
You can avail mobile home refinancing loans in case you wish to in order to get a lower interest rate on your mobile home mortgage loan and enjoy making some savings out of it. You can opt for a Title I loan program provided the mobile home is your primary residence. There are some criteria which you need to fulfill in order to get a mobile home refinance loan. Know more about the eligibility criteria.
- Low Credit Refinance
You may have a number of loans including credit cards, personal loan or even a mortgage and are not able to pay them off in the right time. This is when your credit score starts going down and now if you look forward to a refinance, you may be perceived as a low credit borrower.
However, inspite of low/bad credit, it is possible to [url=http://www.mortgagefit.com/Mortgage-Basics/do-i-qualify-for-a-mortgage.h... for a mortgage[/url]. But there are lenders who may require you to pay a higher rate of interest on the refinance loan compared to what you had to pay had your credit score been a favorable one. However, bad credit loans provide you with an option to rebuild your credit while you make regular payments on the refinance loan. At times, you do need these loans in order to consolidate and eliminate other debts, provided you take out extra cash through the refinance - the process being known as cash-out refinance. Know more on Bad credit refinance.
Now that you're aware of the different ways by which you can refinance your current loan, you need to decide upon the loan program that can fulfill your purpose of refinancing and help you save the maximum.
Loan types to choose for refinance
|Your Situation||Favorable Loan programs|
|Require cash||Home equity loan|
|Home improvement||Home equity loan/Line of credit|
|Need loan amount below $300,700||Conforming fixed rate loan|
|Need above $300,700||Jumbo fixed rate loan|
|Plan to stay beyond 5 years||Fixed rate loan|
|Wish to sell within 5 years||Adjustable rate of mortgage|
|Add a room or other improvements at home||Cash-out refinance|
|Buying a vacation home||30 year fixed rate|
It's better if you can shop around and apply for mortgage quotes with a number of lenders. This will make you aware of the rates and trends prevailing in the market. It will give you an idea on what the mortgage rates are likely to be in the forthcoming days. You can then go for the right loan program keeping in mind your needs as well as what the market trends are likely to be in the near future.
[list:16cff98493][*:16cff98493]How to refinance your current mortgage[/list:u:16cff98493]