Mortgage Refinance: FHA, VA, USDA, and Conventional to Reduce Rate/Term, Debt Consolidation, or Cash-Out
Those who are looking to refinance their mortgage have a number of different options out there. Refinancing can be done for a number of reasons:
- Lower the interest rate
- Reduce the length of time they pay on the mortgage
- Consolidate multiple loans into one payment
- Do a cash-out refinance to get a new mortgage for more than is owed to have extra money for other expenses.
FHA Streamline Refinance
In order to qualify for an FHA streamline refinance, the applicant must already have an FHA-insured mortgage and be current on the payments. A FHA refinance can be used to lower the monthly payments or change an adjustable rate mortgage into a fixed-rate one. A FHA refinance doesn’t require an appraisal, nor does it have closing costs. This streamline refinance doesn’t require as much paperwork, either. Closing costs cannot be included in a VA refinance, so sometimes, the interest rate is higher in order for the lender to make back the closing costs.
VA Streamline Refinance
A VA streamline refinance is available to anyone who currently has a VA loan. This refinancing option is very similar to an FHA streamline refinance. However, the VA does allow closing costs to be included in the mortgage. In order to be eligible for a VA streamline refinance, the veteran must be current on their mortgage. They are allowed to have had one late payment within 12 months.
Those who refinance through the USDA, like through the VA, may be eligible for true 100% financing, which means they would pay nothing at closing. This loan does require paying for monthly mortgage insurance, and it is only available if the property is within a USDA loan qualifying area. Those who have a USDA home loan, have made all of their mortgage payments on time for the past 12 months, and are living in the house as their primary residence can refinance. There is no qualifying credit score, inspection, or appraisal required.
Refinancing with a conventional mortgage can be done with any lender, but it often requires more paperwork and applicants to have to meet stricter guidelines. A larger down payment and closing costs are also often required, but lenders also have more flexibility than government programs, and it may be possible to negotiate lower fees.