How To Refinance Your Mortgage | Smart Change: Personal Finance | poststar.com – The Post Star

There are several reasons why you might choose to refinance your mortgage, such as if you can qualify for a lower interest rate or pay off your mortgage faster. But before you proceed, it’s important to understand the potential downsides as well as exactly what the entire process entails.

If you’re wondering how to refinance your mortgage, here’s what you need to know.

What Is a Mortgage Refinance?

A mortgage refinance is when you take out a new loan—ideally one with better terms—to pay off your current one. Similar to getting your first mortgage, you’ll generally need decent credit, verifiable income and a low debt-to-income (DTI) ratio to qualify for conventional refinancing.

However, there are also different options that might better suit your needs, such as if you refinance a loan backed by the Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA) or Department of Veterans Affairs (VA).

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Types of Mortgage Refinances

There are multiple kinds of refinance loans available but here are the more common types.

  • Rate-and-term refinance: This allows you to get a new rate and different terms on a new loan. If you have a conventional loan, you can refinance into a new conventional loan or opt to refinance into a government-backed loan—or vice versa.
  • Cash-out refinance: With this option, you’ll pay off your existing mortgage with a new, larger loan. You’ll then get the difference as a lump sum to use how you wish (minus any closing costs or fees). In addition to conventional cash-out refinance loans, FHA and VA cash-out refis are also available.
  • FHA streamline refinance: If you already have a loan backed by the FHA, this will allow you to refinance into a new FHA loan with lower with less stringent documentation and underwriting requirements as well as no appraisal. This allows for faster processing compared to a traditional refinance. Additionally, the FHA provides both a credit-qualifying and a non-credit-qualifying streamline refinance option, depending on your situation.
  • USDA streamline refinance: Like an FHA streamline refinance, this allows current USDA borrowers to refinance their loans even if they have little to no equity in their homes. You can opt for a streamline-assist refinance or a standard streamline refinance, which is somewhat harder to qualify for. Neither type of loan requires an appraisal unless you received a subsidy while taking out your original USDA loan.
  • VA interest …….

    Source: https://poststar.com/business/investment/personal-finance/how-to-refinance-your-mortgage/article_743ec20d-6aaa-5e19-8965-771070aa8735.html

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