Refinancing Options
If you are a homeowner, refinancing can give you the opportunity to obtain cash for home renovations, for important purchases or allow you to get rid of debt with high interest rates and transfer those balances into debt with better terms.
Some of the things that refinancing can help out with are:
- the cost of a college education or child
- consolidating bills
- getting the extra cash you need for vacations
- home improvements that improve the value of your home
Cash Out Refinancing
If your home value has increased recently a cash out refinancing is an excellent option for you. This type of refinancing allows the homeowner to obtain another mortgage that will replace the one they currently over. Because of your home’s appreciation, these mortgages can be for more than what you currently owe. This essentially allows you to free up your equity and put it to use in other areas of your life.
This type of refinancing however should most often be done after you have built up quite a bit of equity since most banks are going to want to see this and may have an appraisal done to determine the increase in value from the time you bought your home.
Streamlined refinancing
This home refinancing option is known as streamlined because the main goal is to reduce the interest rate that you’re paying on your current home mortgage and usually does not require an appraisal. There’s much less paperwork for this type of home refinancing as well. This could save everyone involved valuable time and money.
Some of the things that are removed from the streamlined refinancing option are:
- As mentioned, there is no appraisal
- There is often no credit underwriting involved
- The debt to loan ratio does not normally apply
- Credit checks are most often not needed to streamline refinancing
- Income verifications are not usually required
- Streamline refinancing applications can be submitted over the phone or through the mail and even online
To qualify for this type of home refinancing you must have an FHA loan is in good standing and the refinancing must lower your monthly interest payments from what you are currently paying. One of the things that you cannot get with this type of refinance is cash back from the new mortgage. If your finances are in order and you don’t have a lot of debt, this is an excellent option for you.
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