There are different types of refinancing loans available, and you can opt for the one that best suits your needs.
- Adjustable rate mortgages: This type of mortgage carries a fixed interest rate for 5 or 7 years, then changes each year depending on the market index. The 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, then the loan rate can either go up or down depending on the market conditions. You should be well prepared financially if you are going to opt for the ARM as both the payment and interest rate can go up at any time.
- Cash-out refinancing: This gives qualified borrowers the chance to refinance their mortgage with a low rate and get cash from home’s equity. You can consolidate debts, finance home improvements, pay for college or make investments with the cash-out refinance mortgage.
- FHA Streamline: This type of refinance mortgage is the best option for borrowers whose debts are more than the value of their home. No appraisal, income or credit documentation may be required for this type of loan.
- Fixed Rate loans: As the name suggests the interest rate and payment don’t change with this refinance mortgage. They are available for a period of 10 to 30 years. The fixed rate loan increases your protection from unexpected payments; thereby making it a safe bet.
- HARP refinance program: This program is also for the borrowers who own more than their house is worth. A streamlined, low documentation is required for this type of refinance mortgage.
- USDA Streamlined Assist: This is a new refinance loan project whose application process is quite simple. The eligibility to qualify for this loan is very relaxed, and it also ensures dramatically reduced fees for existing USDA borrowers.
- VA Mortgage payments: This mode of refinance mortgage is designed specifically for Veterans. It is approved by the Federal Government and is issued only by approved lenders. They come with quite flexible guidelines.