Mortgage Refinance Programs: All You Need to Know

When home mortgage rates drop, it is natural for home mortgage borrowers to go for refinancing programs. This way, they reduce the amount of interest paid on home loans, which forms a notable part of their financial obligations. Although refinancing has its pros and cons, knowing the right time and the type of refinancing program help you take a right decision. In this article, we have discussed some refinance programs available and their finer lines.

Federal Housing Administration Streamline

Federal Housing Administration (FHA) Streamline refinance program is an ideal option for the borrowers who have an FHA mortgage. The program is an alternative to traditional FHA mortgage with better terms and low monthly payments. FHA loan approved borrowers do not need to submit new documents stating financial situation or new income qualification for FHA streamline refinance program. This type of refinancing also doesn’t require any:

●       Home appraisal

●       Termite inspection

●       Credit report

The only little drawback with FHA streamline program is that it doesn’t allow a cash out.

Veteran Affairs Streamline

Similar to FHA refinance, Veteran Affairs (VA) streamline refinance program has lower interest rate than the original VA loan. Again, you must have a VA loan to qualify for the VA streamline refinancing and should go for it, only if it is available at low rates. Moreover, some VA loan lenders may require an appraisal and credit report for VA streamline refinancing.

Home Affordable Refinancing

This type of refinancing option is specifically for borrowers who were not able to avail FHA or VA refinancing due to the depreciating home value. This type of refinancing program increases the long-term affordability of loans, saving borrowers from a foreclosure if they are unable to repay the loans on time. Borrowers make the most of Home Affordable Refinancing if their mortgage is securitized either by Fannie Mae or Freddie Mac. Moreover, borrowers must be up-to-date with their current payments, and the income must be enough to afford a new mortgage.

Conclusion

Any good refinancing program applied during a period of low-interest rate should benefit the borrower by lowering their monthly housing payments and shortening the mortgage term. Borrowers, however, need to be careful while taking the advantage of such refinance programs as there are complexities that can trip a poorly informed borrower and result in a raw deal. It is always advisable for borrowers to consult refinance experts before signing the dotted line.