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When you refinance your mortgage to take cash out, you’re leveraging your investment in your home with the equity it’s gained over the years. This can create a great opportunity to pay off high-interest debt (just think about finally saying goodbye to student loan payments or significant credit card debt) or invest in something new like home renovations, new appliances, or other major purchases.
You’ve crossed becoming a homeowner off your adulting to-do list, but what’s next? How about saving for retirement or starting a college fund for your child? Lower monthly payments through refinancing can make it happen.
Maybe you’re comfortable with your monthly mortgage payments but want to pay off your loan faster to reduce the amount of interest you pay over the life of your loan. That’s another way refinancing can work for you.
Refinancing an existing conventional loan may help you lower your rate if your income and credit score have improved, or you could shorten the life of your loan with a 15- or 20-year term instead of 30. You can also convert non-conventional loans like FHA loans and USDA loans to cut costs by dropping your mortgage insurance or securing a lower interest rate.
VA IRRRL loans offer a refinancing option for VA loans that can reduce your monthly costs with a lower interest rate or by converting an adjustable rate mortgage to a fixed-rated loan.
You can refinance FHA loans with a new FHA loan or by converting to a conventional loan. Streamlined refinance options are available, but they do not allow cash out, only lower monthly payments.
USDA loans can be refinanced just like any other mortgage. If your payments are current and your credit score is good, you may qualify for USDA refinancing.
Refinancing a second home is a lot like a refinance on your primary residence. However, much like with purchasing a second home, the qualifying requirements are more stringent.
Often, refinancing an investment property is a smart move for investors who want to fund additional property purchases. However, you may also choose to refinance a rental property if you simply want to lower your interest rate and reduce monthly payments.