Mortgage Refinance Options
Freedom Mortgage offers many types of mortgage refinance options. The type of loan that’s best for you will depend on your financial situation. Before you choose a loan, you should consider "why to refinance" as well as "when to refinance."
Here are several questions that may help you determine the "why" part of the refinancing equation:
- Do you need access to extra cash? VA Cash Out Refinancing, FHA Cash Out Refinancing or Conventional Cash Out Refinancing may help you achieve your financial goals.
- Would you like to lower your monthly payments and/or save money over the life of your loan? You may be able to qualify for an FHA Streamline Refinance , VA Streamline Refinance, or a USDA Streamline Refinance which require much less documentation. A Conventional Rate and Term Refinance may also be an option if you do not qualify for a streamline program.
- Would you like to convert your Adjustable Rate Mortgage (ARM) to a Fixed Rate Mortgage? Your mortgage refinance options for accomplishing this include an FHA Streamline Refinance, a VA Streamline Refinance, and full-documentation FHA, VA and conventional loans. Reasons for converting from an ARM to a fixed rate mortgage include:
- Stability. Your base monthly mortgage payment (principal and interest) will always stay the same.
- Potential savings. If you stay in your home for a long time, a fixed rate mortgage may be more affordable than an adjustable rate mortgage.
Once you have established your reason for getting a new mortgage, you can move on to deciding when to refinance.
When to Refinance a Home
While there are many good reasons to refinance a home, timing can make a big difference in the financial benefits you are likely to receive by restructuring your mortgage.
As you consider when to refinance a home, you are more likely to benefit if one or more of the following statements apply:
- Interest rates are low
- Interest rates are expected to rise; this is important especially if you want to refinance from an adjustable rate mortgage into a fixed rate loan
- It has been at least two years since you originally obtained (or refinanced) your mortgage
- You have built up significant equity in your home and you need access to extra cash to pay down high-interest debt or meet expenses
- You are in a stronger financial position than you were when you obtained your current loan and you would like to shorten your loan term and save money over the life of your loan
There may also be tax advantages to refinancing. Consult your tax accountant or financial advisor for details.
After you have decided when to refinance, the next step is to weigh the benefits of using conventional financing versus government-backed loan programs (FHA, VA and USDA).
- An FHA loan might be best if you have less than perfect credit or are seeking a low down payment
- A VA loan offers a low down payment and other special benefits for active military, veterans and eligible spouses
- A USDA loan may offer easier qualifying to borrowers’ whose properties meet specific eligibility requirements
- A conventional loan may be a good choice if you have good credit and cash for a down payment
Each of these refinance options is available as a fixed-rate or adjustable-rate mortgage.
To get a better understanding of when to refinance a home and what type of loan to choose, speak with a loan specialist at Freedom Mortgage.
While you can get a rough estimate of the financial benefits of refinancing by using our Refinance Mortgage Calculator, it is best to work with a loan specialist who will take the time to understand your financial situation and explain the options that are available to you.