Refinance

Reasons to Refinance

The first step in deciding whether you should refinance is to establish your goals. The most common reasons for refinancing a mortgage are to take cash out, get a lower payment or shorten your mortgage term.

Take Cash Out

Cash-out refinancing replaces your current home loan with a bigger mortgage, allowing you to take advantage of the equity you’ve built up in your home and access the difference between the two mortgages (your current one and the new one) in cash. Many homeowners use cash from their home to pay off high-interest credit card debt and student loan debt. You can also take cash out to finance home improvements, education or whatever you need. Since mortgage interest rates are typically lower than interest rates on other debts, a cash-out refinance can be a great way to consolidate or pay off debt. Additionally, mortgage interest is tax-deductible, but the interest on other debts usually isn't. You may be able to take cash from your home if you've been paying on the loan long enough to build equity. Additionally, you may be able to do a cash-out refinance if your property value has increased; a higher value on your home means your lender can give you more money to finance it.

Lower your payment

Lowering your monthly mortgage payment by refinancing to a lower rate or extending your loan term can make it easier to pay your mortgage on time every month while also possibly covering your other debts and expenses. And if you’re concerned about your ability to make your current mortgage payment in the future, lowering your monthly payment now can help relieve that pressure. There are three ways we can help you lower your monthly mortgage payment. First, you may be able to refinance with a lower rate. If rates now are lower than they were when you bought your home, it's worth talking to your lender to see what your interest rate could be. Getting a lower rate means lowering the interest portion of your monthly payment and big interest savings in the long run.

Second, you could refinance to get rid of mortgage insurance a monthly fee you pay to protect your lender in the event that you default on the loan. Mortgage insurance is usually only required when you put down less than 20%. You could save hundreds of dollars a month by refinancing to stop paying monthly mortgage insurance.

Third, you can get a lower payment by changing your mortgage term. Lengthening your term stretches out your payments over more years, which makes each payment smaller.

There may be other ways you can get a lower payment, so it's always worth checking with one of our Loan Originators to see how they can help you get a payment that fits your current budget.

Shorten Your Mortgage Term

Although you may have chosen a 30-year mortgage loan, who says you must wait that long to own your home outright? If you are someone who would like to pay off your mortgage early, there are several ways to accomplish your goal. Shortening your mortgage term is a great way to save money on interest. Often, shortening your term means you'll receive a better interest rate. A better interest rate and fewer years of payments mean big interest savings in the long run.

An important thing to know about shortening your term is that it may increase your monthly mortgage payment. However, less of your payment will go toward interest, and more of it will go toward paying down your loan balance. This allows you to build equity and pay off your home faster.

There are many different refinance programs to consider

Conventional Loans

FHA Streamline Refinance

Fixed Rate Mortgages (FRMs)

With a fixed rate mortgage, your interest rate and payments will be consistent throughout the duration of your loan. You can rest assured knowing your interest rate won’t increase alongside market rates. You may also benefit from refinancing if market rates decrease.

Adjustable Rate Mortgages (ARMs)

An ARM can save you money on your loan, but there is a risk that market rates may increase during an adjustment period and make your monthly payments higher. However, you can set caps on your ARM.

A periodic cap limits how much your rate can adjust at specified adjustment dates. A lifetime cap limits how much your rate can increase over the life of your loan. A payment cap limits how much your monthly payment can increase with each adjustment.

Eligibility

You must have sufficient income and credit history to qualify for a conventional mortgage.

FHA Streamline Refinance

What Are The Benefits?

FHA Streamline Refinances are the fastest and most simple way for a homeowner with an FHA-insured home loan to refinance their existing mortgage because the FHA allows the home’s original purchase price to be used as the current value of the home rather than requiring an appraisal. This may be a good option for homeowners who are underwater on their mortgages because the loan will be based on the original purchase price regardless of what the home is actually worth when the homeowner refinances.

Eligible Borrowers

First and foremost, you must already have an FHA home loan. Additionally, when you apply for your FHA Streamline Refinance, we will consider your income, assets, liabilities and credit history. Having less-than-perfect credit is not a barrier to an FHA home loan. The following are some other requirements for consideration:

You must have a perfect 3-month payment history on your existing FHA home loan
At least six payments must have been made on the existing FHA home loan
You cannot refinance until 210 days have passed from the most recent closing date
The loan balance may not increase to cover the loan costs
You must demonstrate a Net Tangible Benefit from the FHA Streamline Refinance:
- Reducing the sum of the principal, interest and mortgage insurance
- Changing from an adjustable rate mortgage to a fixed rate mortgage
- Applying for a cash-out refinance to consolidate debt and pay other expenses

There are many factors to consider when refinancing. A licensed loan officer from Competitive Lending can help you determine whether an FHA Streamline Refinance would be beneficial in your situation.

VA Interest Rate Reduction Refinance Loan

What Are The Benefits?

No appraisal or credit underwriting package is required.
You can include the costs of getting an IRRRL in the new loan.
You can refinance an existing VA ARM into a fixed rate VA loan.
You can reduce a 30-year mortgage into a 15-year mortgage to pay it off sooner.

What Do I Need To Be Eligible?

While a Certificate of Eligibility is required for a VA loan, it is not required to obtain a VA IRRRL. However, you should still provide it to us to show that you previously used your VA entitlement. Note that you cannot use the funds from your IRRRL to pay another non-VA mortgage. If you have a second mortgage, that loan must be subordinated so that your VA loan is your first mortgage

FHA 203(k) Refinance

VA Interest Rate Reduction Refinance Loan

What Are The Benefits?

Buying a house that needs rehabilitation can often be a complicated and costly process. Repairs can drain your savings or investments. Interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment. An FHA 203(k) loan can save you time and money because it combines the purchase cost and the repair cost into a single fixed rate or adjustable rate mortgage.

Eligible Borrowers

U.S. citizens
Permanent resident aliens
Qualified non-profit organizations
Qualified non-permanent resident aliens
State and local government agencies