There are many key terms to be aware of when it comes down to your mortgage. This is especially true when refinancing the most important investment you have, your home.
It’s better to know what you are looking at than to leave it up to chance. These terms are important to remember if you’re considering refinancing.
Cash-Out Refinance
This is when the home’s mortgage amount exceeds the existing mortgage amount. Cash-out is the process of removing equity from the homeowner’s house.
This type of refinancing is a way to tap into additional cash to help with monthly expenses. However, the equity you take will be added to your existing home loan balance.
Rate and Term Refinance
This type of mortgage transaction involves refinancing an existing mortgage to take advantage of a lower interest rate.
This type of change won’t affect the amount of your home mortgage, but it will alter the interest rate. As a result, your monthly payments will be lower and you may have a shorter amortization time due to the overall reduction in costs. These loans often have lower interest rates than cash out refinances.
Streamline Financing
This type of refinancing can be offered by the Federal Housing Administration and the Department of Veterans Affairs. It is also available by certain financial institutions.
This type of refinancing is not for everyone. It’s intended for those who are looking to get out of an adjustable-rate mortgage (ARM) or take advantage of low interest rate.
Although you might need to have a financial assessment done to be eligible for this option, it is possible that this will not necessarily be necessary.
There are many key terms associated with refinancing a mortgage or getting a mortgage. It is important to understand them all so that you make the right decision.
For more information, please contact your local Beverly Hills mortgage broker.