Refinancing Options

Refinancing Options

As a homeowner you enjoy the benefits of investing in your property, with the reassurance that you will one day own your home outright, and have an asset with appreciating value for the rest of your life. For some homeowners you find yourself in a hardship, and want to cash in on that investment before it is paid for in full. There are a number of ways you can cash in on your home’s equity, or reduce your monthly payment. For a full list of options that may be available to you in your particular situation, contact you Croteau Real Estate agent. Here are some of the most common refinancing options taken advantage of in today’s market.

Cash-Out Refinance

If you home is worth more today than you owe on it, this option may be right for you. A cash-out refinance will allow the homeowner to refinance their existing mortgage by taking out another mortgage on the same property. The second mortgage combined with the first can not equal more than the current value of the home, and often the second is at a higher rate and shorter term than the first. It should not be used if you are facing a hardship and find yourself unable to make monthly payments.

Streamline Refinance

A good choice for many homeowners a streamline refinance may allow you to reduce the overall interest rate of your loan without having to go through extra steps such as home appraisal and valuation. This is an option for many families that want to consolidate credit cards, send a child to college, make home improvements, or take a much needed vacation. By allowing you to tap into the equity you have accumulated in your home to pay for these types of expenses and streamline refinance might be the right option for you.

Federal Home Affordable Refinance Program (HARP)

For homeowners that meet specific criteria your underwater loan may be eligible for a refinance under the HARP program. The HARP program allows qualified borrowers to refinance a loan that is between the 105-125 percent range of the value of you home. Homeowners already on the road to foreclosure will not qualify for this type of refinancing option. In fact, a delinquent payment within the 12 month period prior to the attempted HARP refinancing will automatically dismiss you as a candidate from this program. Additionally, your loan must be owned by either Freddie Mac or Fannie Mae and will heavily depend on your payment history, credit score, and the current home financing structure.

Federal Home Affordable Modification Program (HAMP)

If you are a homeowner with not only an underwater home but also missed payments, you may be able to qualify for home refinancing under the HAMP through your mortgage lender. Like other federal refinancing programs, you must meet certain criteria to quality. This includes the ability to demonstrate a financial hardship that puts your mortgage in imminent danger of default. The HAMP is only available to mortgage loans signed through a lender with the U.S. Treasury. While there is an government incentive to the lender to process these modifications, of up to $1,500, the ultimate approval rests with your lender. A HAMP is not a true refinancing program, but by changing the contract terms it may lower your payments for up to 60 months.

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