Home Refinance Options: Saving Money on Your Loan
If you’re a homeowner, you may be wondering if now a good time is to refinance your mortgage. With interest rates at historic lows, many homeowners are looking to refinance their loans to save money on their monthly mortgage payments. But with so many options available, it can be overwhelming to figure out which one is right for you. In this article, we’ll look at some of the most popular local home refinance options and help you understand how they can save you money on your loan.
Rate-and-Term Refinance
A rate-and-term refinance is the most common type of refinance. This type of refinance allows you to change the interest rate and the term of your loan. For example, if you have a 30-year fixed-rate mortgage and you refinance to a 15-year fixed-rate mortgage, you’ll have a lower interest rate and a shorter loan term. This can save you thousands of dollars in interest over the life of your loan.
To qualify for a rate-and-term refinance, you’ll need to have a good credit score and a stable income. You’ll also need to have a good payment history on your current mortgage. Your lender will also need to verify that your home has enough equity to qualify for the refinance.
Cash-Out Refinance
A cash-out refinance allows you to take cash out of your home’s equity to use for other purposes. For example, you may want to use the cash to pay off high-interest credit card debt or to make home improvements. To qualify for a cash-out refinance, you’ll need to have a good credit score and a stable income. You’ll also need to have a good payment history on your current mortgage.
When you take cash out of your home’s equity, you’ll need to pay closing costs and other fees, which can add to the overall cost of the refinance. However, a cash-out refinance can still be a good option if the interest rate on your current mortgage is significantly higher than the current market rates.
FHA Streamline Refinance
The FHA Streamline Refinance is a special type of refinance for homeowners with an FHA-insured mortgage. This type of refinance allows you to refinance your current FHA loan without having to go through a full underwriting process. To qualify for an FHA Streamline Refinance, you’ll need to have made at least six months of mortgage payments on your current FHA loan and have a good payment history.
One of the biggest benefits of an FHA Streamline Refinance is that you won’t have to pay closing costs. However, you will have to pay a small upfront mortgage insurance premium. Overall, an FHA Streamline Refinance can be a great way to save money on your loan if you have an FHA-insured mortgage.
VA Streamline Refinance
The VA Streamline Refinance, also known as an Interest Rate Reduction Refinance Loan (IRRRL), is a special type of refinance for homeowners with a VA-guaranteed mortgage. This type of refinance allows you to refinance your current VA loan without having to go through a full underwriting process. To qualify for a VA Streamline Refinance, you’ll need to have made at least six months of mortgage payments on your current VA loan and have a good payment history.
Like the FHA Streamline Refinance, one of the biggest benefits of a VA Streamline Refinance is that you won’t have to pay closing costs.
