When you decided it’s time to refinance and replace your old mortgage with a new one, it can result in many benefits. Not only could you get a better interest rate and term, but you could also save money in the long run. That’s why it’s so important to know the different types of home refinance loans and find which one is best fit for you.
In this blog, we highlight the top five refinance home loans so you can decipher which one would be the best choice for you.
Top 5 Types of Home Refinance Loans
Rate and Term Refinance
A rate and term refinance can be used for traditional refinancing of a conventional loan or turning an FHA loan into a conventional loan. This loan can be used if you’re looking to reduce your interest rate and the amount you pay per month. Generally, when people have an FHA loan they like to refinance into a conventional loan because it helps them lower their mortgage insurance.
Home Affordable Refinance Program (HARP)
HARP loans are a government-funded mortgage program that was designed to help homeowners in need when their property value begins to drop due to a crash in the housing market. HARP will help you get a lower mortgage rate, even if you aren’t currently able to pay off your loan. However, the deadline for a HARP loan is in 2018, so you should decide quickly if this is the right loan for you
Home Equity Line of Credit (HELOC) & Home Equity
HELOC loans give you a line of credit, similar to a credit card, to help you as needed. The only thing you have to pay is interest on your borrowed amount. A home equity loan gives you a single amount of cash that can be as much as 80 percent of the market value of your home. Both of these loans allow you to use the equity that you’ve accumulated in your house as collateral for the loan.
A cash-out refinance is when you take out more money than the amount you owe on your mortgage in order to get some extra cash. Just like the HELOC loan, you can take out 80 percent of the value of your home in cash. After a cash-out refinance you will typically get lower rates and just have to make one monthly payment on your mortgage.
A streamline refinance speeds up the home refinancing process plus it’s a great way to lower your interest rates. You can get a streamline refinance through government home loans including the FHA, VA, and USDA. The streamline refinance loans speeds up the process because it doesn’t require your credit score, income verification, or nearly as much paperwork as a traditional refinance.
Refinance Your Home Loan Today
Trusted Home Finance can help you go through the types of refinance home loans and find which one is right for you. We offer expert advice and ensure that you have everything you need when you’re ready to pursue a refinance on your home loan. To speak with one of our trusted professionals, contact us today.