- Financial institutions offer fixed rate refinance options including 15, 20 and 30 year fixed rate plans. Refinancing your mortgage at a fixed rate means that your payments will stay the same throughout the life of your loan. You will not have to worry about unexpected increases due to a rise in interest rates. The longer term you have, the lower your monthly payment will be. However, if you choose a shorter term refinance option, such as the 15 year option, your interest rate will be lower.
- The Federal Housing Administration offers a short refinance option, which allows homeowners who owe more on their homes than they are worth to refinance at lower than the home's appraised value. Under this option, the lender may be able to write off a portion of the existing loan principal, which could significantly reduce the monthly mortgage payments. The FHA short refinance option is offered at no additional cost to the homeowner.
- The Home Affordable Refinance Program is available for homeowner who have a mortgage financed through Fannie Mae or Freddie Mac. The program provides low-cost refinancing to struggling homeowners whose homes have devalued in price. The program offers 15 and 30 year fixed rate options. To be eligible, you must be able to make the new mortgage payment and have an acceptable mortgage payment history.
- Active duty and retired military personnel who have a mortgage through the Veterans Administration have a number of options available for refinancing. The streamline refinance option, or rate-reduction mortgage, refinances existing VA home loans at a lower interest rate. Some lenders may offer this option with no out-of-pocket expense to the homeowner. The VA also offer a cash-out refinance option where a conventional or existing VA loan may be refinanced for more than the original mortgage. The difference is paid back to you in cash, which may be used for a variety of purposes including loan consolidation, medical bills or paying college tuition.
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