Search:

News by Subject
Complete list of specialty news sections.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Mortgage Industry News
Subscription-based news for people who work in real estate finance.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories for your web site or for your RSS reader.

News Archives
Archive of news entries.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Graphs
Directory of lenders, branch operators and mortgage service providers.
home advertise email RSS about us
 
HOT Topics Rates Glossary LO License Search
Consumer Mortgage News
Free mortgage news for current and prospective borrowers from a leading online mortgage industry news publication.



Mortgage Refinances for Other Than Lower Rates

5 ways and reasons to refinance your mortgage

Aug. 18, 2017

By HOLDEN LEWIS Bankrate.com (Tribune News Service)



Though mortgage rates have rebounded some from the lows seen in 2016, they remain very attractive. Many homeowners are refinancing before rates go higher.

Yes, you can save money by doing a simple refinance in which you swap a lower rate for your existing higher rate.

But that's just one way -- and one reason -- to refinance. There are at least four other reasons.

Here are some of your options.


Rate-Term Refinance
Nowadays, this is the most common form of refinancing.

When you get a rate-term refinance, you replace your mortgage with a loan sporting a lower interest rate, and for roughly the same term.

The term is the payoff period: A 30-year mortgage has a 30-year term.


Cashout Refinance
These were popular during the housing boom and contributed to the bust.

When you get a cashout refi, you borrow more money than the outstanding mortgage balance and you receive the difference in cash.

For example, you might have borrowed $225,000 a few years ago, you've been making payments faithfully and now you owe $200,000. Meanwhile, your home's value has swelled. It can be appraised at $300,000. In this case, you can refinance for more than $200,000. In fact, you can borrow up to $240,000 without having to pay for mortgage insurance.

During the boom, a guy on my street got several cashout refinances. At least one was a subprime loan. He ended up owing much more than he originally paid for the house. Eventually, he couldn't afford the payments, forfeited the house and moved out of state.

There are responsible ways to use a cashout refi. You can use the money to pay off high-interest debt. Or you could use it for a home improvement: a swimming pool, solar panels or whatever.


Shorten the Term
You got a 30-year mortgage three or five years ago, and you want to refinance.

You don't have to start over with a 30-year repayment period. You can ask to pay it off in a shorter time than that -- 27 years, 25 years, 20 years or 15 years. Your choice.

If your preferred payoff period is more than 20 years, you'll probably have to get a 30-year mortgage and ask the lender to amortize it over your preferred, shorter period.

Most lenders offer 15-year mortgages, which generally have lower interest rates than 30-year loans. A few lenders offer 20-year mortgages with slightly lower rates.


Cash-In Refinance
Yes, in addition to the cashout refinance, there's such a thing as the cash-in refi. This happens when you have some money lying around and you spend it to pay off part of the old mortgage. Then the new, refinanced loan is for less than the old loan.

Cash-in refis used to be more popular. But in today's low-interest environment, any spare cash would best be used to invest in something with a higher return than your mortgage interest rate.

Divorces can force a variety of the cash-in refi, in which one former spouse pays off a portion of the outstanding loan balance and the remaining spouse refinances the loan in her or his own name.


Refinance to Get Rid of Mortgage Insurance
You made a down payment of less than 20 percent, and you've been saddled with mortgage insurance payments as a result.

But in the years since you got the mortgage, you paid down some of the debt and, more important, the value of your house went up a lot. If the outstanding loan amount is less than 80 percent of the home's appraised value, you might be able to refinance into a loan without mortgage insurance.

This can be an especially valuable tactic if you have a mortgage insured by the Federal Housing Administration -- also known as an FHA loan.

With modern-day FHA loans, you can't cancel the mortgage insurance -- even when your loan-to-value ratio falls below 80 percent. The way to get rid of FHA mortgage insurance payments is to refinance (or to sell the house).

next story

back to home page


To see more of Bankrate.com or to subscribe to the newspaper, go to http://www.Bankrate.com

Copyright (c) 2017, Bankrate.com

Distributed by Tribune News Service.


This story was distributed by TNS - Tribune News Service
 
Refinance News
News about refinance programs, pricing and production.
H A R P 2.0 News
News stories about the H o m e Affordable Refinance Program including expanded program guidelines.





Copyright © 2016 MortgageDaily.com
MortgageDaily.com Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

pricing engine directory

wholesale lender directory

More Mortgage News Resources (MortgageDaily.com full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

free mortgage news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

refinance news

reverse mortgage news

sales blog

secondary marketing

servicing news

subprime news

wholesale lenders

wireless mortgage news