A mortgage refinance is a loan type that allows a borrower to lower the interest rate on their current mortgage or change the product for example going from a 30-year fixed mortgage to a 15-year fixed mortgage or refinancing from an Adjustable Rate Mortgage to a Fixed Rate Mortgage. The key elements to getting a Mortgage Refinance completed are like obtaining a purchase mortgage. The borrower needs to be employed with 2 years of adequate employment history. The home needs to appraiser for enough to have the correct amount of equity to meet the underwriting guidelines for the type of mortgage refinance requested. Good credit history also plays an important role in obtaining the best rate and terms for a mortgage refinance. If you are interested in whether refinancing makes sense for you in Bonney Lake, Graham, Sumner, Spanaway, Tacoma, or other parts of the US give the Northwest Mortgage Team a call at 253-840-5600!
What Types of Refinances are available:
Rate and Term Mortgage Refinance
This type of mortgage refinance is done to lower your interest rate or to change loan types for example a fixed rate to an adjustable rate or vice versa or from a 30 YF to a 15 YF. This type of loan there must be a benefit of lower rate to the borrower. Rate and term mortgage refinances can be done at the same LTV (This is the max amount the loan amount can be as a percentage of the Appraised Value of your home) as a Purchase loan. For example, on a VA loan 100% LTV is allowed, an FHA 96.5% LTV and Conventional loans at 97% LTV.
Cash out Mortgage Refinance
A cash out mortgage refinance is done when a borrower has sufficient equity to take cash out of their equity to pay off other debts or the borrower can use the cash to improve their property or other reasons the borrower may need extra cash liquidity. For most loan types the LTV of a cash out mortgage refinance is lower. VA loans is the one exceptions to this guideline as they will allow a mortgage refinance cash out up to 100% of the Value of the home. An FHA cash out allows a borrower to go to 85% of the appraised value of their home for the loan amount. Conventional cash out loans allow up to 80% of the appraised value or LTV for the max loan amount.
FHA Streamline Mortgage Refinance
FHA has a special program for borrowers that currently have an FHA loan. The benefit must save the borrower .5% in rate and monthly mortgage insurance combined savings but if this can be obtained there is no income documentation required and there is no appraisal required. This mortgage refinance type is a simple way to drop your monthly payment and save money that can only be completed if you currently have a FHA loan.
VA IRRRL Mortgage Refinance
VA has a special program for Veterans to complete a mortgage refinance with ease. This is the VA IRRRL program that allows a veteran to drop their interest rate to save money. The loan requires no appraisal and no income documentation. These are great programs to help veterans complete a mortgage refinance with little documentation required.
What is the next step to complete a Mortgage Refinance?
If you are interested in whether refinancing makes sense for you in Bonney Lake, Graham, Sumner, Spanaway, Tacoma, or other parts of the US give the Northwest Mortgage Team a call at 253-840-5600!. We can help you figure out the best option to choose and if doing a mortgage refinance will benefit you.