Posted on: 30th Mar, 2004 03:55 am
Most people choose to refinance 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:
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.
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.
- 5 ways to refinance your existing loan
- Loan types to choose for refinance
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 qualify for a mortgage. 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
There are various loan options available in the market. You need to choose from the options depending upon your finances and the situation you are in. We have given a list of the situations and the loan options one may go for if he wishes to 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.
Related Readings
Hi Rocesile,
Refinance are generally done to get a better rate over the existing loan. But when you know the new rate for the refinance loan is going to be 6.7%, which is higher than your present rate 5.6%, then why will you go for refinance? It is better if you remain with your present loan. To decide whether to go for second mortgage or refinance the existing loan, it is better if you can calculate what are going to be the payments in both the cases. For a second mortgage, the interest rate may be higher. You should decide if you will be able to bear that. Why not check out the payments with the Cash-Out Refinance vs Second Mortgage Calculator at http://www.mortgagefit.com/calculators/cashoutrefinance-secondloan.html
Refinance are generally done to get a better rate over the existing loan. But when you know the new rate for the refinance loan is going to be 6.7%, which is higher than your present rate 5.6%, then why will you go for refinance? It is better if you remain with your present loan. To decide whether to go for second mortgage or refinance the existing loan, it is better if you can calculate what are going to be the payments in both the cases. For a second mortgage, the interest rate may be higher. You should decide if you will be able to bear that. Why not check out the payments with the Cash-Out Refinance vs Second Mortgage Calculator at http://www.mortgagefit.com/calculators/cashoutrefinance-secondloan.html
get a second mortgage on a reverse mortgage
Hi hponzio.
Welcome to the forum.
Whether you should take a second mortgage or a reverse mortgage, it totally depends upon your situation. So please tell us you situation or problem so that we can help you better. BTW you can even seek No-obligation free consultation to know which kind of mortgage will be best for you situation.
Best of luck,
Larry
Welcome to the forum.
Whether you should take a second mortgage or a reverse mortgage, it totally depends upon your situation. So please tell us you situation or problem so that we can help you better. BTW you can even seek No-obligation free consultation to know which kind of mortgage will be best for you situation.
Best of luck,
Larry
Hi Hponzio,
I guess your question is whether you should go for a second mortgage or a reverse loan. Isn't that so? well, how old are you? Reverse mortgages are typically meant for seniors aged 62 and above. Also, do you have enough equity in your home? And one more thing that I'd like to say is, you won't have to make monthly payments in a reverse mortgage. Just read the information on reverse mortgage to know what it's all about.
Take care
I guess your question is whether you should go for a second mortgage or a reverse loan. Isn't that so? well, how old are you? Reverse mortgages are typically meant for seniors aged 62 and above. Also, do you have enough equity in your home? And one more thing that I'd like to say is, you won't have to make monthly payments in a reverse mortgage. Just read the information on reverse mortgage to know what it's all about.
Take care
I own a 1997 dw home on a acre of land. Everything is free and clear paid for in cash. I want to buy a boat from my mother and pay off our two cards and a credit card or two. Our credit scores are 580-610. (Maybe alittle higher or alittle lower depending on company.) I have been at my job for 10 years, but i took off two years inbetween, my husband has been in nuclear construction for 5 years and mechanical construction for 12 years, which his job is to move from job to job. Our annaul salary combined is around 100,000 pre-taxed. Do you have any opinions? Also, we filed for bankrupcy 6 years ago, chapter 13, and paid every payment on time for 5 years and have dismissal papers. We would like to do this while rates are lower. Thanks. Tara from NC
Pay off our two cars.
Hi tara
With the credit score that you have mentioned, you can get a FHA loan against your property and then pay off your cars, credit cards and buy the boat. You can also take a personal loan and buy the boat and pay off the cars. As far as the credit cards are concerned, you can try for a debt consolidation.
Thanks.
With the credit score that you have mentioned, you can get a FHA loan against your property and then pay off your cars, credit cards and buy the boat. You can also take a personal loan and buy the boat and pay off the cars. As far as the credit cards are concerned, you can try for a debt consolidation.
Thanks.
We have 5 years left on our 30 year fixed rate mortgage (we are paying 10.98%) but we would like to pay off $15,000's worth of credit cards & a loan and also do some home improvements.
What kind of loan would be best or is refinancing something we should look into?
What kind of loan would be best or is refinancing something we should look into?
Hi Marilyn
I guess you have equity in your property. You can go for a home equity line of credit for home improvements and paying off the credit cards. However, you should remember that this would be a second loan on your property.
Thanks.
I guess you have equity in your property. You can go for a home equity line of credit for home improvements and paying off the credit cards. However, you should remember that this would be a second loan on your property.
Thanks.
I am 9 years into a 5.75% loan with 77,000 principle, 24 years left and a 30 year loan. Should I refinance to a4.5% loan at 15 years? Also 3,500 closing costs.
Tabitha
yes I would do it if you can afford the 15yr payments. You will save lots of money in total interest payments by the time you pay off the loan.
yes I would do it if you can afford the 15yr payments. You will save lots of money in total interest payments by the time you pay off the loan.
I have a low credit score, and my loan is at 6.4% . I'm having trouble meeting the payments ( I've got a 30year Fixed VHA loan) I've been late but have always made them. I'm wondering if there is a program that I can see about getting a lower rate to drop my payments by $200 a month - it would really help.
I called my current mortage company and they said they could drop it to around 5.2 % but the payments would only drop around $23 dollars - Is that right? A friend called and she dropped the same amount but it dropped by $300 ( we have the same mortage company) however she has better credit. What gives?
I called my current mortage company and they said they could drop it to around 5.2 % but the payments would only drop around $23 dollars - Is that right? A friend called and she dropped the same amount but it dropped by $300 ( we have the same mortage company) however she has better credit. What gives?
Hi PBL,
You can contact other lenders and check out what type of rates they are offering you. If you find lenders offering you a better rate, then you can go with them. However, you should note that in order to refinance the property, you should have some equity in it.
Thanks
You can contact other lenders and check out what type of rates they are offering you. If you find lenders offering you a better rate, then you can go with them. However, you should note that in order to refinance the property, you should have some equity in it.
Thanks
in need of cash which is better a refinance with cash out or a home equity
Hi msmilan,
If you go for a home equity loan, you would be responsible for paying off two loans. In my opinion, getting a refinance would be a better option for you as you would be responsible for paying off only one mortgage. However, you should have equity in order to qualify for a refinance.
Thanks
If you go for a home equity loan, you would be responsible for paying off two loans. In my opinion, getting a refinance would be a better option for you as you would be responsible for paying off only one mortgage. However, you should have equity in order to qualify for a refinance.
Thanks