Home refinancing programs

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There are a lot of refinancing programs available in the market that you can choose from, depending on your current financial status and scenario. Most homeowners get entangled with the wrong kind of refinancing program especially if they did not do enough research on which program would suit them best.
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  • 1. TYPES OF REFINANCING PROGRAM
  • 2. HARP Well, if you are not behind on your mortgage payments but could not get a traditional refinancing due to the falling value of your property, you may refinance through the Home Affordable Refinance Program or HARP which was designed to help underwater homeowners to get an affordable and stable mortgage.To qualify for this program, your mortgage must be owned by Fannie Mae orFreddie Mac and should have been endorsed on or before May 31, 2009. Thecurrent loan-to-value ratio should be greater than 80% and the borrower shouldhave good payment history in the past 12 months.To know if your mortgage is owned by Fannie Mae or Freddie Mac, you may visitwww.knowyouroptions.com or call (800)7Fannie or visit www.FreddieMac.com .
  • 3. FHA REFINANCE This is a refinance program issued by FHA approved lenders which are insured by the Federal Housing Administration. This was created to refinance homes of borrowers with lower income, weaker credit history and with no money on hand.There are three kinds of FHA refinancing loan programs for homeowners:rate and term, streamline and cash out. There are factors that willdetermine whether you can refinance through FHA and which type ofrefinancing you qualify.
  • 4. FHA RATE ANDTERM REFINANCERate and term refinances existingmortgage for the purpose of changingthe interest rate and/or term of themortgage without advancing newmoney on the loan. It is primarilydriven by a drop of interest rates,refinancing the loan to lower interestrate or to change the mortgage term,like if you wish to change you current30-year mortgage into a 15-year termmortgage.
  • 5. CASH-OUT REFINANCEThis is a type of refinance where a loan istaken out on a property you alreadyowned and the loan amount is above andbeyond the cost of transaction, pay-offexisting liens and related expenses. Insimple terms, it replaces your currentmortgage with another loan which will payyour current mortgage balance and usesyou property’s equity to provide additionalfunds for other purposes. Cash-outrefinance offers flexibility and variety thatcould meet with the borrower’s needs likeobtaining cash for homeimprovement, consolidating debt, reducingrate and monthly payment.
  • 6. FHA STREAMLINE FHA streamline is a type of refinance transaction that is reserved for homeowners with existing FHA mortgages. It is called streamline because it allows FHA insured homeowners to reduce the interest rate on their existing mortgage.It has less paperwork requirements and does not need an appraisal.The verification of credit is not needed and no proof of income isrequired. It has low fixed rates and no-cash out. This is considered tobe a great refinancing program.
  • 7. CONVENTIONAL REFINANCE This is the type of loan which is not guaranteed by federal government agencies such as the Federal Housing Administration or FHA, Veterans Administration. This could either be conforming or non-conforming. The conforming mortgages are mortgages that follow the guidelines of Fannie Mae or Freddie Mac, while the non-conforming are considered as jumbo loans which exceeds the maximum loan amount required by Fannie Mae and Freddie Mac.If a homeowner refinances into a conventional mortgage with a lower interest,the monthly payments may be reduced and the amount needed to repay duringthe life of the loan. Mortgage insurance in conventional refinance is neededonly up to the end of the first two years of the loan unlike in FHA mortgagewhere it is required for five years.
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