Exploring Refinance Loans
When you refinance your mortgage on your home you are paying off your current mortgage with a new mortgage which will have new terms depending on what your goals are. All loan types offer a refinance option whether its FHA, VA, USDA, Conventional or Non-qm. A Rate and Term Refinance is for when you want to lower your mortgage payment and is usually consisted of either one or a combination of reducing the interest rate, reducing or removing the mortgage insurance, and increasing or decreasing the term of the mortgage which is typically consisted of 15 or 30 year terms. 30 year mortgages are usually the "go to" term in order to keep the payment lower but if your goal is to pay it off faster then the 15 year is the next runner up. A Cash-out Refinance is for when you want to pull money out of the equity of your home for whatever your goals are. Common reasons people pull cash out are to pay off debt, invest, put your kid through college, go on vacation, or even just have some savings in the bank. Refinancing is a faster process than purchasing and can take as little as 2 weeks as long as there are no extenuating circumstances.
Types of Refinancing
FHA Refinance
FHA Rate and Term Refinance
This is a refinance option offered by the Federal Housing Administration (FHA) to either reduce youre interest rate or reduce your mortgage term. Reducing the monthly interest rate will usually lower your payment but may also restart your payment clock. Reducing your mortgage term will typically make payments go up since you are reducing the time frame you have to make the payments.
FHA Streamline Refinance
This is a refinance option offered by the Federal Housing Administration (FHA) that is typically quicker than a rate and term refinance but requires that you already have an FHA mortgage. It is considered streamlined because it is usually a faster process and in some cases don't require an appraisal. The FHA requires that you have made 6 payments and have had your current FHA loan for 210 days.
Cash-out Refinance
This is a refinance option offered by the Federal Housing Administration (FHA) and allows you to pull out cash from the equity of your home. Usually this is done with a goal of paying off debt, investing, college, vacation, or even to just have some money in savings.
Conventional Refinance
Rate and Term Refinance
This is a refinance option offered by most lenders to either reduce youre interest rate or reduce your mortgage term. Reducing the monthly interest rate will usually lower your payment but may also restart your payment clock. Reducing your mortgage term will typically make payments go up since you are reducing the time frame you have to make the payments.
Cash-out Refinance
This is a refinance option offered by most lenders and allows you to pull out cash from the equity of your home. Usually this is done with a goal of paying off debt, investing, college, vacation or even to just to have some money in the banks.
VA Refinance
Interest Rate Reduction Refinancing Loan (IRRRL)
This is a refinance option offered by the Veterans Administration (VA) that allows you to reduce your interest rate. This is the VA equivilant of a Streamline Refinance and is usually much faster and requires less documentation than a regular rate and term refinance.
Cash-out Refinance
This is a refinance option offered by the Veterans Administration (VA) that allows you to pull out cash from the equity of your home. The VA is the only entity that allows you to pull cash out up to 100% of your homes value!
USDA Refinance
USDA Steamline Refinance
This is a refinance option offered by the United States Department of Agriculture (USDA) that are very similar the FHA Streamline and the VA IRRRL. You must already have a USDA mortgage, be current on the mortgage for 180 days, and have had the USDA mortgage for at least 12 months.
USDA Streamline-Assist Refinance
This is one of the most popular refinance program that the United States Department of Agriculture (USDA) offered to consumers to reduce their monthly payment. You must have had your current USDA mortgage for the last 12 months and there must be a minimum reduction of $50 to the borrowers monthly payment.
USDA Non-Streamline Refinance
This is a refinance option offered by the United States Department of Agriculture (USDA) that is very similar to to the USDA Streamline Refinance. A new appraisal is required and this option is mainly considered by borrowers when they want a new appraisal on their home or would like to avoid the $50 monthly payment reduction requirement.
Non-QM
Rate and Term Refinance
This is an refinance option offered by Non-qm lenders and is designed for borrowers who can't get traditional financing to lower thier interest rate and mortgage term. Interest rates are usually higher than normal to compensate for the risk the lender takes on.
Cash-out Refinance
This is a refinance option offered by Non-qm lenders that allows for borrowers to pull cash out of the equity in their home. Interest rates are usually higher than normal to compensate for the risk the lender takes on.