Powered by Edge Home Finance, LLCA refinance replaces your current mortgage with a new loan. Your goal may be to change the rate or term, move to a different loan program, or access equity. Compare the full costs and benefits for your situation.
A conventional rate-and-term or limited cash-out refinance can replace an existing mortgage to adjust the interest rate, loan term or loan structure, subject to program rules. A conventional cash-out refinance may allow an eligible homeowner to access some equity by borrowing more than the amount needed to pay off the current mortgage. The new balance, payment and total interest may increase.
An FHA Streamline Refinance is for a current FHA-insured mortgage and has limited borrower credit documentation and underwriting under HUD rules. FHA cash-out refinancing is another option for eligible borrowers who want to refinance and access equity. FHA requirements, costs and mortgage insurance apply.
A VA Interest Rate Reduction Refinance Loan (IRRRL) is for eligible borrowers who already have a VA-backed mortgage and want to refinance under program rules. A VA cash-out refinance may let eligible borrowers refinance an existing VA loan or a different type of mortgage and access equity. VA eligibility, occupancy, lender and program requirements apply.
Review the new rate, monthly payment, closing costs, mortgage insurance or funding fee, loan term and total interest. If costs are added to the loan, the balance may rise. A lower payment may come from extending the repayment period and could increase total interest. Your Loan Estimate and financial analysis can help compare costs and potential benefits over the time you expect to keep the loan.
Compare the new loan’s closing costs with any monthly savings, and consider how long you expect to keep the loan. Review the new balance, term, total interest and costs added to the loan as well as the monthly payment.
Some conventional, FHA and VA programs offer cash-out options for eligible borrowers. Limits and requirements depend on the program, equity, property, borrower and lender.
Depending on eligibility, a refinance may replace a conventional mortgage with an FHA or VA loan, or replace a government-backed loan with a conventional mortgage. Compare the costs and features before deciding.
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