If you wish to decrease your monthly mortgage payments, refinancing your loan may be the best option for you. Citycreekmortgage.com and other mortgage planners explain this involves getting a new loan on better terms, giving you breathing room to your monthly bills.
There are several categories of mortgage refinancing depending on your budget and the duration you expect to occupy your home. Here are a few types:
Cash-out refinance
A cash-out refinance mortgage involves acquiring a bigger loan to pay the balance of your initial mortgage and provide you with extra cash. You can typically borrow up to 90% of your total home value. However, with this type of loan, there is an increased danger of losing your house if you default on your monthly loan payments.
Cash-in refinance
With cash-in refinancing, homeowners pay off their existing loan balance with their cash before getting a new loan. The main advantage of this loan is that it qualifies you to get a lower mortgage interest rate, shorter loan term or both. It also cancels your mortgage insurance premium payments.
Rate-and-term mortgages
This is the most common type of mortgage refinance. With this loan, your original mortgage is paid off and substituted with a different one. The new loan comes with new rates and terms. Rate-and-term loans are the ideal option if you are looking for lower interest rates and a change in your existing mortgage terms.
Short refinance refers to a transaction where your lender consents to pay your mortgage and substitute it with another loan that comes with a reduced balance. It is mostly used by homeowners who are looking to avoid foreclosure. With the extensive options of mortgage refinance loans available, talking to a trusted mortgage planner helps you pick the best product for you.
