If you’ve owned your home for a while, you may be getting the itch to refinance. Refinancing can be a good move financially when you use the new loan as a way to lower your mortgage or interest rate, or to cash out your equity for other investments. However, in order for the refinance to have some or all of these financial benefits, you need to acquire a loan that is giving you the FHA Best refinance rates possible. That is where these tips come in.
Streamline Refinances or Cash Out – Why Do You Want a Refi?
Before you approach a lender on a possible refinance, look at your finances and consider why you want to alter the loan. Are you looking for a way to reduce the interest rate or the mortgage payments, or do you want funding to improve the home or purchase a new investment, possibly even a second home? Your reason for refinancing will come into play when determining the type of refinance, so make sure you have it locked down. In addition to this, you’ll want to consider the length of time you’ll be at the home as well.
When refinancing if you’re looking to reduce the interest and/or mortgage payments, you will want to consider looking at streamline refinances or no cash back options. The streamline option is only available to homeowners with existing FHA mortgages, but if you are one of these homeowners, it is a great way to refinance. The process is much easier than a traditional refi. It doesn’t require an appraisal and you go through much less paperwork. In addition to this, the costs associated with it usually aren’t terribly high. Basically, with a streamline you’re keeping the terms of the loan but reducing the interest rate. If that’s your end goal – a reduced interest rate – than you’ll want to consider this. If you don’t currently have a mortgage through the federal programs, then the no cash back option will be your best bet for making the loan terms more favorable. It will require a little more work than the streamline, but getting a streamline or a no cash back option can be a great way to secure the available FHA best refinance rates.
Shop Around to find the FHA best Refinance Rates
When you’re trying to secure good refinance rates and terms, you’re going to want to shop around. Most professionals recommend that you call multiple lenders before settling with one. You want to find out what interest rates they can give you, as well as the basic loan terms and any fees associated with it. The interest rates can vary per lender depending on the promotions they are currently running. In addition, though a lender may offer what appears to be a great interest rate, oftentimes the fees overshadow the rate, making the loan cost more in the long run. A good loan officer can help you sift through this information
Another tool people use to help determine the FHA best refinance rates is to plug in their information to a mortgage calculator and examine the results. While these calculators are not fixed terms, they can give a fairly accurate idea of what a person may be looking at in the long run. This is where you can see what the difference will be in your mortgage payments and overall cost of the loan when the interest rate changes even one percent. For some, this may act as a motivator to clean up the credit report before heading to the bank.
Last but not least, compare the new loan with the loan you currently have. The reason to refinance is to put yourself in a better financial situation. Usually when you’re getting a streamline or no cash back refinance, the goal is to reduce the interest rate and/or monthly payment. Now, on a cash back refinance you will probably have a higher mortgage and you may have a higher interest rate. All of these variables will change depending on the lender and your finances. However, when you compare your existing loan with the new loan, if you find that you’ll be paying more in the long run (with the exception of a cash out refinance) you may want to consider a different option.
It’s important to note that all of these options are tips recommended for homeowners, but your best option will be to consult with a professional loan officer who can help you determine what you are able to qualify, what you need to do to qualify for a lower rate, and whether or not a new loan will actually serve you.