If you own a home, you have more than likely heard about the housing market, low mortgage rates, declining house values and prices, and several other updates about the status of the current housing market. There has been unceasing chatter about refinancing programs, bailouts, underwater home loans, and several other changes that have been made to lending programs and available loan options. The flood of information that comes in on a daily basis can be extremely confusing and raise a myriad of questions about your loan, the cost and value of your home, and if you can save money from any of the changes that have been implemented.
Have questions about refinancing? Speak to an expert to clear up uncertainties.
While the concept of refinancing is nothing new, there have been several new programs and policies put into place that have changed the way it works. In the past, people would refinance to withdraw money from their home based on the equity that had built up over the years. People would do a cash-out refinance or would open a second mortgage to receive immediate cash to take a vacation, pay off other bills, or buy a new car or boat. More recently, however, homeowners are refinancing not to withdraw money out of the equity of their homes, but to lower their loan’s interest rate and save money on the remaining term of their mortgage. There are several options available for homeowners to choose from when selecting a refinance, and the variety may seem complex and overwhelming.
For first-time homebuyers who have an FHA loan, an FHA streamline refinance is a great first option to consider. With no home appraisal required and the cost of the closing fees rolled into the price of the loan, this option is quick, simple, and can be issued by any FHA licensed lender. The whole process is designed to be quick and streamlined, enabling you to start saving money right away.
If you don’t have an FHA loan, you may qualify for a conventional refinance. Thanks to the HARP program, homeowners with a conventional loan can often refinance their underwater home without incurring mortgage insurance. Closing costs associated with a conventional refinance can be rolled into the new loan amount in most cases. In many cases, a HARP refinance does not require an appraisal. HARP is one of the best tools available in today’s market for homeowners with a conventional mortgage to refinance into a lower rate.
If you have a home that has been paid off, you can take out a cash-out mortgage to receive money at closing, assuming enough equity in the home. Many people will do this as it’s a great way to obtain funds at a low interest rate. Often this money will be reinvested into the property, used for remodels, touch ups, new additions, and other projects that can increase the size or value of the home. The money must be paid back, but often people will use this money and then sell their home, hoping that the investments made will increase the home value enough that they can sell and make enough money back to pay off the loan and make some profit.
While the news and information surrounding the housing markets and mortgages can be confusing, there are lots of great opportunities as well. Speaking to a lender about your mortgage options is a great place to get started, as they will have answers to specific questions that you might have about your individual needs. Speak to a lender and start saving money today!