How Mortgage Relief Refi Options Work

How Mortgage Relief Refi Options Work

Amazing Guide To Mortgage Relief Refinancing — Fast And Easy

( – Refinancing your mortgage can seem like a harrowing process. You’ve already been through the financing process and understand how thorough the banks are and how long it can take. A refi is no different. You’re bound to spend a good amount of time, and in many cases money, moving to a more suitable mortgage for your situation. Relief options, if they’re available, can also be a windy road to travel. Knowing your options ahead of time will help you better prepare for the journey ahead.

Relief May Be Available

Most banks and mortgage companies have relief programs for people struggling. If you’re looking to find the best options to keep your current loan and bring it up to date, talking directly to your lender is your best bet. For those whose loans are owned by Fannie Mae or Freddie Mac, however, your options get better.

Fannie Mae and Freddie Mac are private companies chartered by Congress that buy loans directly from banks for packaging and sale in the secondary mortgage market. The banks use the money they make to allow more lending, while Fannie Mae and Freddie Mac either keep and service your loan or group it with other loans to sell to investors. In doing so, the firms help keep rates down, prices fair, and competition encouraged. If one of these federally-backed brokers owns your loan and you meet certain requirements, you may be able to refinance to a lower payment, a lower rate, or a shorter term. You can check to see if they own your loan with this online tool.

Conventional Refinancing

Those looking for a new financial direction rather than relief have many options. There’s no shortage of lenders or lending promotions. If you’re making the move to refinance because you can (not because you have to), you’ll want to decide what type of loan you need before picking the lender. There are two basic options.

No Cash-out Refinance

A no cash-out refinance is for those looking for a lower payment, rate, or term, but not looking to take any cash equity from the home. Loans of this nature will typically have lower interest rates, as the banks are looking to court your business from a plethora of available lenders. They’re also useful to move from one mortgage to another. For example, maybe your adjustable-rate mortgage (ARM) isn’t working for you and you’d prefer to lock in today’s prime. Or, perhaps you’re just looking to shorten the term of the loan so you’ll own your home in less time.

Cash-Out Refinance

A cash-out refinance allows you to use the equity in your home as collateral to get cash for improvements, vacations, emergencies, or whatever your life may require. Cash-outs are typically more expensive because you’re borrowing more than the original amount and raising your payments, making them a higher-risk loan type.

Refinancing Is Usually a Good Thing

Whether it’s to get you out of a financial pickle, improve your budget, or provide you with some much-needed cash, refinancing your home is typically a great option to consider. Your home is, most likely, the most valuable thing you own. When was the last time you checked to see if it’s living up to its full potential?

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