Refinancing to reduce your monthly payment can provide many benefits for a household but use caution, refinancing too many times can be costly and may not be a benefit in the long run. In today’s market a borrower should be looking at more than just the note rate of a mortgage loan. All borrowers should look at their total cost to obtain their mortgage loan.
Conventional versus FHA type mortgage loans; after April 1st of 2013 the mortgage insurance rates on FHA loans may now prove to be too costly for borrowers with a loan to value greater than 90%. Some points to consider when refinancing, generally FHA mortgage loans have a lower interest rate than conventional mortgage loans, but the cost of mortgage insurance on conventional type mortgage loans is about half the cost of mortgage insurance on FHA mortgage loans.
The Solutions First Mortgage Team believes it is very important to look at all the different mortgage loan types that you may qualify for from Conventional type mortgage loans, VA, and all FHA mortgage loans. You may also be upside down on your current mortgage loan and may be able to take advantage of one of the HARP mortgage loan programs.
Cash-out refinance allows you to take cash out to pay closing cost, cash for home improvements, or cash for debt consolidation or other expenses.
Cash-in refinance allows a borrower to put down a sum of money in order to lower their loan to value ratio which may help get them a lower interest rate and may also be used to eliminate mortgage insurance.
If a borrower qualifies for a VA mortgage loan the borrower should first figure out their LTV (loan to value ratio) before using their VA benefits. A mortgage loan with a LTV greater than 80%, for a Veteran, should price out the different options between Conventional, FHA, and VA. The Veteran or Borrower should look at their total cost of the mortgage loan and not to be drawn into just a lower note rate in its self.
In short to refinance your home there are many options but getting all the facts surrounding your personal financial situation is just as important in matching the best type of loan that fits you and your needs.
Almost every type of loan can be used to refinance including; Conventional, FHA, USDA, VA, HARP loan programs and reverse mortgages.
If you have any questions or would like further assistance please contact us directly and we will try our very best to help wherever possible.
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