7 types of refinance mortgage loans
Different types of refinancing loans are available, and you can opt for the one that best suits your needs.
- Adjustable rate mortgages (ARM): This type of mortgage carries a fixed interest rate for 5 or 7 years, then changes each year depending on the market index. Adjustable-rate mortgages typically start with a lower monthly rate than fixed-rate loans, but then, once the fixed rate period comes to an end, the loan rate can either go up or down depending on the market conditions.
If you opt for ARM, you should be financially prepared for fluctuations in the payment as well as interest rates. Cash-out refinancing: This type of loan gives qualified borrowers the chance to refinance their mortgage at a low rate and get cash from the home’s equity. You can consolidate debts, finance home improvements, pay for college or make investments with cash-out refinance mortgage loans. FHA Streamline: This type of refinance mortgage loan is the best option for borrowers whose debts are more than the value of their home. One does not need an appraisal, income or credit documentation for this type of loan. Fixed rate loans: As the name suggests, the interest rate and the payments do not change with this refinance mortgage loan option. The loan’s tenure is around 10 to 30 years. The fixed rate loan protects you from unexpected hikes in payments which makes them a safe bet. HARP refinance program: This program is also for those borrowers who owe more than their house’s worth. One needs to follow a streamlined, low documentation process to get approval for this type of refinance mortgage loan. USDA Streamlined Assist: This is a new refinance loan project whose application process is quite simple. The eligibility to qualify for this loan is quite relaxed, and it also ensures dramatically low fees for existing USDA borrowers. VA mortgage payments: This mode of refinance mortgage loans is specifically for veterans. It is approved by the Federal Government and issued by approved lenders. They come with flexible guidelines to ensure that veterans can afford their dream homes.
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