Mortgage Refinance Options

If you are a homeowner and have recently considered refinancing your mortgage loan, you may not realize how many refinancing options you have to choose from for your specific situation.  For instance, did you know if you have a VA or FHA mortgage, you can renegotiate your contract terms rather than refinance?  Or did you know you could cash in on the equity of your home and use the new cash flow for other investment opportunities?  It’s even possible to change your current mortgage rate and reduce your monthly mortgage payment.  All these and more are options homeowners have when refinancing and each should be examined in order to choose the best refinancing option for your unique situation.

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VA Refinancing

Did you know the government provides special benefits to veterans who wish to refinance their mortgage?  That’s right, even if you have a conventional loan or a VA loan, you may qualify for VA refinancing and save money over the long term.

There are three types of VA refinancing and each is set up differently for specific reasons. First, you can choose VA streamline refinancing that will simply lower your loan rate on your current VA loan and doesn’t require any additional closing costs or an appraisal.  The next option for veterans is to use home equity to refinance and allows you to take cash out on the increased equity of the home.  This is a good option for veteran homeowners who are trying to finance home improvements, college tuition, or any other miscellaneous high-priced expenses.  Finally, veterans can choose a conventional to VA refinance which requires a funding fee of two percent but doesn’t require monthly mortgage insurance and may help lower your interest rate.

FHA Refinancing

Similar to VA refinancing, FHA refinancing allows you to streamline your mortgage if it meets certain requirements.  The benefit of choosing this option is a lower monthly principal and interest payment.  The basic requirements of a streamline refinance include having a mortgage that is already FHA insured, the mortgage must be current, and no cash can be taken out on streamline refinanced mortgages.

Cashing in on Home Equity

If you are a homeowner who has experienced fast appreciating home value then you could refinance your current mortgage for a larger one and pull out equity to put towards other investments.  If the new rate is lower than the original and you don’t use all of the equity then you could actually receive a lower monthly payment.  Also, another benefit is the option of being able to shorten the term of the new loan and regain your equity faster.  Whatever the case, homeowners should evaluate their situation to see if this is the best refinance option.

Changing your Mortgage Loan Term

Moving on to some of the more common refinancing options, choosing to refinance your mortgage may open the opportunity to change the term of your loan.  Many homeowners choose this option if they have experienced an increase in personal income or if they simply want to payoff the loan quicker than originally planned. The concept of changing your loan term is very basic but can save homeowners a considerable amount of money in the long run.

Changing your Mortgage Loan Interest Rate

Another refinancing option that is very common and simple to understand is the option of refinancing for a lower mortgage rate. In recent years interest rates have been at record setting lows and lenders are competing for homeowners attention by passing these savings on.  You can definitely benefit from this upward performance in the market but should still compare rates from different lenders in order to ensure you get the best mortgage refinance rate available.  Unfortunately, homeowners don’t have any direct control of this determinant but by watching the market and applying at the right time, homeowners could save a considerable amount of money over the life of their loan

Automatic Refinance Loans

Finally, the last refinancing option to discuss is very similar to an adjustable refinance mortgage but in reverse.  Commonly known as reverse-rate mortgages or automatic refinance mortgages, these loans guarantee your interest rate will drop at least 1 percent below your starting rate even if rates are higher at the time.  These are designed for borrowers who may have had a difficult time finding conventional refinancing because of credit problems.  Usually these types of loans receive interest drops spread out over a couple of years until finally becoming fixed at a lower and competitive rate.

Options for Refinancing your Home Mortgage

So as you can see there are a number of ways to benefit from refinancing your mortgage.  Continued performance in the national housing market has provided new opportunities for homeowners to take advantage of this trend and cash in on the increased value of their homes.