• Refinancing Types

when one plans to refinance, he/she pays off the existing mortgage loan and takes on a new one. However, your home may be your most important financial asset, so you want to be careful while choosing a lender or broker or a specific mortgage plan. Remember with potential benefits of refinancing there are some limitations as well. So choose your refinancing plan carefully!

The following are the main types of Refinancing -

Rate and Term Refinance - It is one of the most common types of refinancing place where the original loan is paid off and replaced with a fresh loan with a new rate and set of terms.

Cash Out Refinance - In case, you are in need to cash, cash out refinance is the right choice for you. Here, you will pull out equity from your home, resulting in higher loan balance. Though it will raise your monthly mortgage payment but  you may be able to offset that rise with a lower interest rate on the new loan.

Cash in Refinance - A cash-in refinancing helps you to bring in cash while refinancing that results in lowering the loan amount with also reduces the monthly payment.

Home Affordable Refinance - The type of refinancing was brought in at the time of mortgage crisis. It allows the struggling borrowers to refinance up to 125% of the value of their home and help “underwater” homeowners to take advantage of the low-interest rates on offer. But the mortgage must be current, tied to a 1-4 unit owner-occupied home, and guaranteed as well.

Short Refinance - Short refinance involves the transaction where your bank or mortgage lender agrees to pay off your existing mortgage and replace it with new a loan with a reduced balance in order to help you avoid the foreclosure.

Be sure of going through all the different refinancing types in order to ensure you end up with the right refinancing plan for yourself.

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