Different Types of VA Refinance Mortgages Help Homeowners

One of the benefits of serving in the United States Military is the right to use the VA loan benefit. A VA refinance mortgage can help homeowners refinance their current mortgage loan in order to lower their current interest rate, eliminate mortgage insurance, and/or consolidate debt.

Types of VA Refinance Mortgages
There are three main types of VA refinance loans that can be used in different situations. If a homeowner who is a current service member or veteran of the Armed Forces wishes to not only refinance his current mortgage, but also consolidate debt, the cash-out VA mortgage would be the best product, regardless of his or her current loan type. If a homeowner currently does not have a VA loan, but wants to take advantage of the benefits offered by this program, he should use the VA rate-term refinance mortgage. If a homeowner currently has a VA loan and wishes to lower his interest rate, the type of refinance that may best suit him is the Interest Rate Reduction Refinance Loan.

Cash-Out VA Refinance Mortgage
This type of VA refinance loan is available to anyone, regardless of their current loan type, provided that they qualify on the basis of military service, credit, and income eligibility. Currently, most lenders allow borrowers using a VA loan to cash out up to 90% of their home’s value. This money can be used to consolidate debt or simply to obtain additional funds for whatever reason the homeowner chooses. Many homeowners use this type of loan to eliminate costly revolving debt and to decrease their monthly payment obligations. Unlike credit card interest, the interest on a homeowner’s mortgage can be low, fixed, and tax deductible.

Rate-Term VA Refinance Mortgage
A rate-term VA refinance mortgage allows homeowners to refinance up to 100% of their home’s value and take advantage of all the benefits that this program has to offer. With a VA loan, the homeowner will never be required to pay monthly mortgage insurance and will have access to low, fixed rates. This type of VA refinance mortgage can significantly lower monthly payments without high out-of-pocket expenses.

Interest Rate Reduction Refinance Loan (IRRRL)
This type of VA refinance mortgage is a streamlined mortgage and is only available to homeowners who currently have a VA home loan. This refinance can be used to obtain a lower interest rate, change the terms of the loan, change the current borrowers, and change to a fixed interest rate from an adjustable rate. When a borrower uses an IRRRL, there are no out-of-pocket costs and no appraisal is required. As a convenience to those who have already used their VA home loan benefit, there are also reduced documentation requirements for income information, asset information, and employment, as well as quick application processing.

There are many different types of VA refinance mortgages that are set up to benefit veterans in different situations. VA home loans can provide great benefits to those who have served their country.

Refinance Mortgage – Make Good Use of Your Second Chance

Taking out a second mortgage may sound easy since you’ve gone through the steps during the first mortgage. Still, people make mistakes with their refinance mortgage. Whatever their options, people should always weigh their capacity to pay back the loan given their unique circumstances.

Is It Time For You to Get a Refinance Mortgage?

No matter what they are saying, like interests rates are lower making the time right for a refinance or something like that, take a hold of yourself. Ask yourself if it is the right time for you to take out a new loan and if you’ve got a very good reason to get one.

The common reasons for taking out refinance mortgage:

1. Debt consolidation

2. Building up home equity

3. Switching mortgage type

4. Big expenses

5. Relocation

6. Business investment

Getting a second loan for the sake of cash in your pocket is not a good reason to take out a loan. A one-time fling with cold cash going nowhere except down the drain will be a drag to pay back for another 15 years.

With the second loan, borrowers are just taking a new loan and putting up the same property for collateral. In a way, the new loan provides you the opportunity to make good use of this second break. All along, you must always bear in mind your financial capacity to pay back the loan.

Lenders weigh the risks. They also check out your credit score and review your performance with the previous loan. If you are decided to get a second loan, for good reason, evaluate the options offered by the lenders’.

Your Mortgage Refinance IQ

To avoid the usual mistakes people make, you should:

1. Know how much mortgage you can afford.

2. Study the going rates.

3. Compare these rates with the present one.

4. Shop around for lenders and compare offers.

5. Study the low rate offered.

6. Add up all the fees you’ll be paying.

7. Ask the company if they charge for early loan payment.

The success of your mortgage refinance depends on the choice of mortgage type to suit your circumstances.

The Two Types of Mortgages

With your second mortgage, you will again have to make a choice between a fixed rate mortgage and flexible rate mortgage. Your experience with your first mortgage will determine how you will go.

Fixed Rate and Flexible Rate Mortgages

This type of mortgage offers you stability throughout the loan period. Whether the market goes up or down, you will continue to pay the same monthly payment. This is ideal for wage earners who have fixed sources of income.

The adjustable rate mortgage has its highs and lows and your payment goes with the tide. If rates are low, you make great savings on your monthly payments, and if the trend stays for quite a considerable time, it is an advantage. But when rates shoot up, refinance mortgage holders usually have to shell out more money than they can afford.

There are several types of refinance mortgage packages, but it still pays to go along with the type that will get you your second chance going without becoming overstressed.

Know About Jumbo Refinance Mortgage Rates

When a homeowner has a jumbo loan, it would save them a ton of money to look into refinancing it. Of course, getting the wrong interest rates and/or loan terms can cause a greater debt and financial ruin. Thus, any homeowner who has million dollar loans need information on how to get the best jumbo refinance mortgage rates.

What Are Jumbo Refinance Loans

Both Fannie Mae and Freddie Mac can only buy and secure loans that fall within a specific limit… according to the guidelines Congress sets. These limits are often based on several factors including the living costs of the area and the range of $417,000 to more than $700,000.

Loans that fall into these limits are seen as conforming and eligible for the conventional interest rates. However, any original loans or refinances more than these limits are seen as jumbo loans. It is possible for borrowers to buy a home with a jumbo loan and pay it down so much that it’s then considered a traditional, conforming loan at the time of refinancing.

A Brief Look At Jumbo Refinance Mortgage Rates

Homeowners need to understand that mortgage rates will vary based on the length of time on the loan and whether the rate is fixed or adjustable. These kinds of rates tend to be higher than the conforming loan rates because of the additional underwriting requirements and the possibility of nonpayment. These costs are often passed to the consumer so it’s common for lenders to charge nearly 0.5 percent premium for these kinds of loans. With higher interest rates, borrowers often pay extra dollars over the loan’s life just so they can have the large loan balance.

How To Get The Best Jumbo Refinance Mortgage Rates

When a homeowner wants to get the best jumbo refinance mortgage rates, they should have great to perfect credit, make or have enough income to pay back the debt and have a low debt to income ratio. Borrowers can also take advantage of the refinancing if they take an amount for less than what the property is valued at. This will lead to a lower loan to value ratio, which can reduce the jumbo refinance mortgage rates.

If borrowers pay points at the beginning, they can reduce their jumbo refinance mortgage rates. Every point symbolizes one percent of the loan. Lenders tend to allow two points paid when closing on the loan. Borrowers also need to remember that the Internal Revenue Service treats paying points for bringing down the interest rate on a refinance differently than they do on a home purchase.

A Look At Interest Only Jumbo Refinance Mortgage Rates

Borrowers whose income vary or have an expectation of staying in their home for so many years can choose the ever-popular interest only jumbo refinance. This means for a period of time, the borrower will pay just interest on the loan, which can drastically reduce the monthly payments. When the pre-determined time comes about, the refinanced loan payments will increase and count toward both the interest and principal amount.

The biggest benefit to this kind of loan is that the money saved can be used somewhere else, as the payments are rather small in the beginning. Of course, the downside is that there is no equity going into the home while these payments are made and the boost in payment amounts can cause homeowners severe anguish down the road.

Lenders generally offer a variety of loan terms and option in the hopes to gain business. Borrowers need to understand the impact this kind of refinancing option, especially if they’re dealing with a jumbo refinance interest only loan or high jumbo refinance mortgage rates. It’s always in the homeowners’ best interest to look around and compare the different jumbo refinance mortgage rates and pick a program that gives them a better standing financially than when they began.