Refinancing your home means you replace your original mortgage with a new mortgage. This allows you to obtain a better interest term and rate and even pay off your home faster. If you’re interested in refinancing your home, the first thing you want to do is decide why you want to refinance. Whether you want a lower payment, to take out some equity, or receive more time to pay, deciding the main reason you want to refinance helps you determine the type of loan you need.
Choosing the Right Mortgage for Refinancing Your Home
Once you’ve decided on your main reason for wanting to refinance, it’s time to look at the different options available. At BrightPath, we offer a wide variety of options depending on your financial goals. These options include:
- Cash-Out Refinance Loan
- FHA Streamline
- 25-Year Mortgage
A cash-out refinance takes equity out of your property which you can then use to renovate your home, pay off debt, or make other important purchases. A cash-out refinance loan works so your new loan amount comes out to more than what you owe on your current mortgage. In return, you get to pocket the difference between the two amounts as cash at closing.
A cash-out loan refinance is a good way to leverage your home equity. While the money can be used to pay off debts, it’s also a great investment to put it into home improvements to help increase the value of your property. While a cash-out refinance is different from regular mortgage refinancing, it can have similar benefits such as tax benefits associated with mortgage interest deductions, a lower interest rate, and the ability to switch from a fixed-rate mortgage to an adjustable mortgage.
Another option for refinancing your home is our student loan cash-out refinance. We know it can be a struggle to make monthly mortgage payments while paying off your student loans. Our student loan cash-out refinance options help you pay off your student debt faster. In this type of refinancing process, you do not get the cashback directly like you would with a cash-out refinance. Instead, it goes directly to your student loan servicer helping to accelerate the student loan payment process.
If you have an FHA loan and you’re looking for even better terms, an FHA Streamline loan may be the best option for you. An FHA Streamline refinance can lower interest rates and monthly mortgage payments for borrowers who have an FHA loan.
An FHA Streamline loan provides you with many advantages. For one, there is no credit check or income and employment verification. With less paperwork, the FHA Streamline loan can speed up the refinancing process significantly. It’s also a great option for home values that have not appreciated as expected. An FHA Streamline refinance lets borrowers use the most recent appraised value since it doesn’t require a home to be appraised.
Most people want to pay off their mortgage quickly. A shorter mortgage offers lower interest rates and can save you money in the long run. However, a 15 or even 20-year mortgage can be challenging to pay off each month. In that case, many people decide to go along with a 30-year mortgage and watch their balance decrease slowly.
This is where the 25-year mortgage can be a fantastic option. Taking 5 years off the life of your loan gives you a more affordable monthly payment while saving you thousands of dollars. That way, if you are not willing to commit to a more aggressive payment schedule with a shorter loan but would still like to see progress on your balance each month, a 25-year mortgage refinance is a beneficial option.
A Home Affordable Refinance Program (HARP) loan is a good option if your home value has decreased over recent years. This refinance loan is also beneficial if you owe more than the value on your home as it allows you to take advantage of today’s low rates despite their equity position.
To take advantage of HARP, your home must be your primary residence, a one to four-unit investment property, or a single-unit second home. You must also have a loan-to-value ratio at more than 80 percent and zero 30-day late payments in the last 12 months. Other requirements include you acquired your current mortgage prior to May 31, 2009 and your mortgage is currently held by Freddie Mac or Fannie Mae.
It’s important to apply with a lender who offers a wide variety of different types of mortgages to ensure you get the best option for your needs. At BrightPath, we’re here to help you determine which loan is right for you and help you with the refinancing process for an easy transition.
Visit our website today or call us at 888-222-6003 to learn more about the different options for refinancing your home.