To refinance your mortgage is the process of paying off an existing mortgage by obtaining a new loan and using the same property as security. Mortgage refinancing can offer a home owner a lower and better interest rate. A home owner could replace a current loan at a 6.5% rate for one with one at only a 4.0% interest rate. In the case of an adjustable rate mortgage getting ready to adjust to a higher rate, a mortgage refinance will replace the old (ready to increase) adjustable rate loan with a new one at current fixed or adjustable rates.
If a home owner has a mortgage coming due, such as a balloon payment, refinancing can pay the money due and replace the balloon loan with either a new fixed-rate or adjustable-rate mortgage. This is especially true in the case of interest-only loans. In addition, a mortgage refinance, according to bankrate.com, can prevent foreclosure and / or bankruptcy. Another thing to remember, most people have better credit than they think, usually Fair Credit or better, keep this in mind while filling out our online form. When contacted by us, kindly ask our loan professional any question you may have. They will be more than happy to assist you in getting the very best rate for the mortgage refinance you need. Remember, all loans don't fit all people; if you need a mortgage loan, we'll find the right one for you.
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Reasons to Refinance Your Mortgage:
- To obtain a lower rate and a lower monthly payment.
- If interest rates decrease a home owner will save money by refinancing at a lower rate - a lower monthly payment.
- To change the type of mortgage.
- If an adjustable-rate mortgage is about to reset, a home owner may want to refinance to switch to a fixed rate mortgage.
- To lessen the length of a mortgage.
- Some home owners want to shorten the term of their mortgage, because the shorter the term, generally, the lower their interest rate will be.
- To obtain cash from the equity in their home - called cash-out refinancing.
- If a home owner only owes $100,000 on their mortgage, but their home is worth $200,000, they have $100,000 in home equity. Many lenders will allow the borrower to refinance at least 80% of the home value, so in our case, the lender will offer $160,000 and since the home owner only owes $100,000, they will be able to cash-out $60,000 to whatever they want.
Types of Mortgage Refinance Loans:
When you are mortgage refinancing, you need to decide again which type mortgage refinance loan, says USAnews.com, will work for you. Chances are, something has changed in your life that you want to move forward with this. Pick the loan that works with that situation the best.
- Fixed Rate Loan. The interest rate and payment remain stagnant over the loan term. No concern for market fluctuations and easy budgeting. Recommended for those intending to live in the property a long time.
- Fixed Rate Balloon. Interest rate and payment stay the same until the loan is due in 3, 5,or 7 years. Have the lowest rates until due. Recommended for those buyers that know they will not remain in the home longer than seven years.
- Adjustable Rate Mortgage (ARM). The interest rate and payment stay the same for 1, 3, 5, 7, or 10 years, at which time the rates can rise periodically to a predetermined amount. Advantage is that you get a better rate while watching the market. Recommended for those that consider the margin and are going to be in their home a fixed period of time.
- Buy Down. Rate and payment remain the same for an agreed upon period of time, then both go up. They go up more than once, depending on the agreement, all predetermined. There is usually a fee to "buy the rate down" in the first, second and third year of the mortgage. Advantage is the low rate and payment during the first few years. Recommended for borrowers having trouble getting a fixed rate loan or need an affordable payment.
The Mortgage Refinance Loans:
When Talking With A Lender About Loan Types And Refinancing Options, The Following Types Of Loans May Be Discussed...
Conforming - Conforming is the term adopted by the industry for loans that meet the government standards (backed or not) that fall within the price range of $10,000 to $729,750.
Jumbo (Non-Conforming) - Jumbo are those loans above $729,750.
Government Loans - Government loans are guaranteed by a government agency like the Federal Housing Administration (FHA) and the Veterans Administration (VA). There are advantages to home buyers who qualify for these services, like an increased loan amount or no required down payment.
Non-Owner Occupied (Investment) - These refinancing options and loan types can be used for primary residences as well as investment properties. The rules may vary somewhat in the case of non-owner occupied investments.
B, C, D Credit (Sub-prime) - These loans are for people without perfect credit. They will cost more money. However, most of the programs can be used even if you don't have excellent credit. A credit score above 500, with the right down payment, payment history and employment history can land you in the home of your dreams. Rates may be a little higher but work with your agent and / or counselor.
No or Low Document Loans - As the name implies, these loans require very little paperwork, just the word of the borrower. These loans are recommended for the self-employed. They also cost more money.
Peak Home Loans can help to refinance your mortgage with good credit, fair credit, poor credit all credit. We offer home refinancing and mortgages for any credit. We specialize in refinancing you home mortgage for you.