3 Options To Refinance Your Home
Are you in a position where you want to refinance your home? If so, it helps to know what all of your options are. Here are three ways that you can refinance.
FHA Streamline Refinancing
One form of refinancing that is worth looking into is FHA streamline refinancing. It has many benefits that make this form of refinancing appealing to homeowners, but the major catch being that you qualify with an existing loan that is FHA insured.
The streamline process is so popular because it skips a lot of time-consuming parts of home refinancing, such as not need to have the home appraised. You can even save on your closing costs because the process of refinancing the mortgage is so easy compared to other options. However, you are unable to roll the costs of closing on the home refinance into the cost of the loan, so it does require you to have the cash on hand to do an FHA streamline.
Another option is cash-out refinancing. As the name implies, it allows you to take out cash in exchange for refinancing the home. It only works if you have equity built up in the home since you are essentially taking money out that you've already put into it. You can't pull out all the money that you put into it since it is typically restricted to a percentage of the home's value.
For example, if you have a $200,000 home, you may only be allowed to take out 80% of the home's value, or $160,000. If you have $110,000 that you still owe on the home, that means you could get cash out home refinancing worth $50,000. This is a great option if you need to borrow money against your home that has already been paid.
Home Equity Loans
A home equity loan can help you get the cash you need to do a remodeling job or other types of home improvements. It uses the current value of your home after calculating what you've paid to determine the home equity amount that you can borrow. This means that you can really benefit from a home equity loan if your home has significantly gone up in value. You do not need to borrow the full amount, but it is an option for you. Home equity loans typically act as a second loan, with its own principal that must be paid, its own interest rate, and its own monthly payment.