Refinancing May Save You Shousands
Mortgage rates are still at an all time low and homeowners should seriously consider refinancing their current mortgage loans to see if there is a net tangible benefit. Many homeowners do not realize that their homes have drastically appreciated in the past few years where they are able to do a cash out refinancing mortgage loan where they can use the excess cash to pay down high credit card debt, use it as reserves, use it for a vacation, do the necessary home improvement that you have been waiting many years for, start a college education fund for your children, or use it for investment where you can multiple your investment returns instead of keeping it in the bank. Homeowners can just do a rate and term refinancing mortgage just to reduce their monthly payments and save thousands on the lower interest rates from their new refinance mortgage loan.
Reasons Why Refinancing May Benefit You In 2015
There are rules and regulations for a mortgage loan originator to refinance your mortgage loan. A licensed mortgage loan officer can only refinance your mortgage if and only if there is a net tangible benefit to you as a homeowner. By net tangible benefit, you as a homeowner needs to have at least a 5% or more reduction of your housing payment after the refinancing mortgage. The first and main reason why homeowners do a refinancing on their home loans is due to the mortgage rate reduction. By doing a rate and term refinance, many homeowners can save hundreds of dollars in interest expense and can greatly reduce their monthly housing payments. This can mean tens of thousands in savings over the life of the mortgage loan.
FHA Streamline Refinance Mortgage
If you currently have a FHA insured mortgage loan at a rate of 4.75% or higher, you may do a FHA streamline refinance mortgage loan where no appraisal is required, no income verification is required so the debt to income ratios will not be an issue, and no credit minimum is required so you can have bad credit as long as you have been timely on your mortgage payments for the past 12 months. FHA has also lowered the FHA annual mortgage insurance premium from 1.35% to 0.85% on FHA 30 year fixed rate mortgage loans. This new rule on the FHA annual mortgage insurance premium reduction is effective January 26, 2015. This is a huge savings for FHA insured mortgage loan borrowers.
Cash Out Refinance Mortgage
Homeowners with equity in their homes can do a cash out refinance mortgage loan. Cash out proceeds from a refinance mortgage is tax free and you can use the proceeds to pay off high interest credit cards, high interest debt, investments, start up a child education fund, or other ways that may suit you with no questions asked. Maximum cash out on a FHA insured mortgage loan is up to 85% loan to value. You need to wait six months to do a rate and term refinance FHA mortgage loan from the home purchase date and you need to wait one year from the home purchase date to do a cash out FHA refinance mortgage loan.
Waiting Period To Refinance After Home Purchase On Conventional Loans
With conventional loan, the waiting period is six months from the date of purchase to either do a rate and term refinance mortgage loan or a cash out conventional refinance mortgage loan. Maximum loan to value for a cash out refinance conventional loan is 80% loan to value.