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Mortgage Refinance

Refinance allows borrowers flexibility with their mortgage: change term, monthly mortgage payment, interest rate, and more.

Borrowers might choose to refinance their loan for any number of reasons:

  • Reduce term, save thousands off future interest payments
  • Reduce rate, drop monthly payments
  • Take cash out, consolidate debt or make home improvements
  • Drop Mortgage Insurance, save thousands off monthly payments

Every loan  (Conventional, FHA, USDA, VA, Manufactured Home) has its own signature programs and standards. And where those don’t succeed, try something like HARP (link), to solve negative equity situations.

Below, we include a few notable programs and popular reasons for refinance.


The Home Affordable Refinance Program (HARP) allows borrowers may not otherwise qualify for refinancing because of declining home values or reduced income (DTI of 65 percent), the ability to refinance their mortgages into a lower interest rate and/or more stable mortgage product. HARP is unique in that it enables borrowers who owe more than their home is worth to take advantage of low interest rates and other refinancing benefits.

FHA Streamline

The FHA Streamline Refinance is a simple way for FHA borrowers to lower their monthly mortgage payment by refinancing into a lower mortgage rate. Borrowers must  display a history of consistent payments, and reduce their monthly payments by 5%.

VA Streamline Refinance (IRRRL)

The VA-backed streamline refinance product, called the Interest Rate Reduction Refinancing Loan (IRRRL), allows vets to drop their VA mortgage rate WITHOUT a new appraisal, WITHOUT asset documentation, and WITHOUT income requirements.

Cash-Out Refinance

A cash-out refinance loan is a great refinance option for borrowers looking to convert their home equity into cash.  A cash-out refinance replaces a borrowers’ current mortgage with a larger loan and uses the home’s equity to provide additional funds for other purposes, such as debt consolidation, home improvement projects, and more.

Eliminating Mortgage Insurance

Mortgage insurance is an additional monthly charge that may be assigned to borrowers who cannot pay 20% down on their home loan (notable exceptions exist). Once reaching certain equity and/or credit thresholds, the homeowner might be able to refinance into a new loan and drop (or significantly reduce) his/her/their mortgage insurance.

Thus, if you can afford the higher payment, it makes since to refinance into this shorter term, higher payment loan because it will net you thousands and thousands of savings over its duration.
Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile