With or Without Harp here are 5 ways you might Refinance your Home!

Are you considering refinancing your home? You cannot listen to all the the talk of low Mortgage rates and not consider looking into it. Maybe you have some equity and would not mind taking out a little cash right now. The problem is the devil that is on your shoulders. Yes, there are naysayers out there that say that it cannot be done or that you would be crazy to cash out of your home right now. I know I get it. Jealousy is a disease of the worst kind. The bottom line is that if you are considering refinancing there are a few different options that you have.The following is a list of opportunities that may be available to you:

1. Streamline FHA – This is a simple and effective way to lower your rate on your FHA mortgage. If you currently have a rate that exceeds 5.875% then you may want to talk to your professional. There are limited costs such as title insurance, processing and few miscellaneous. You will receive a refund from the upfront MIP that you paid or financed initially and that can be applied to your costs. In most cases that I have done or seen the borrower brings their monthly payment to the close of escrow or less.
2. VA IRRL or VA Cash-out Refinance - The VA IRRL is similar to and FHA streamline. The goal is to minimize the cost of the refinance so the Veteran can lower the rate on their note. A Cash Out VA loan is the same as a traditional cash out mortgage but for Veteran’s only and with certain restrictions.
3. DU Refi Plus - This program is part of the HARP (Home Affordability and Stability Plan) that was recently released. If your loan is owned by Fannie Mae you can refinance your first Mortgage to 105% of the homes value. If you have a second in place then that second can be subordinated to an unlimited CLTV. This will vary case by case and lender by lender and many of the wholesalers have their own overlays. Overlays are added guidelines to protect their investors. Essentially stricter underwriting.
4. Freddie Mac’s Relief Refinance Mortgage – This Program is the same as the DU Refi Plus but Freddie Mac requires that you return to the current servicer of the loan. What this means is that if you have a Freddie Mac owned loan and that loan is serviced by Countrywide you will have to refinance with Countrywide. In my post Breaking News Fannie Mae and Freddie Mac to the rescue? I have listed the sites where you can find out who owns your mortgage.
5. Traditional Refinance – If you are one of the few that have equity in your home you have the ability to capitalize on today’s low rates. The one concern is the appraisal on many of these loans because often times the lender will do an AVM or Desk Review of our appraisal. This is especially common when you are looking to take cash out of the property. Here are a few ways to refinance traditionally:

• Rate and Term Refinance – A rate and term refinance is simply as it states. It is when you refinance to lower the rate or the term of you mortgage. Many cases you can do both at the same time. I have several clients that are taking advantage of this opportunity right now. They are cutting the term of their mortgage from 25-30yrs to 15-20 yrs.
• Cash-Out Refinance – A cash out refinance occurs when you borrow equity from your home. The cash may be used to pay off debt, home improvements, vacation, investing or whatever else you choose to do with it. WARNING – The appraisal on a cash-out refinance will be scrutinized the higher the LTV. Also, there are costs that are associated with a cash-out refinance that you will not incur on a rate and term refinance. It is part of the risk based pricing that Fannie Mae and Freddie Mac have gone to.
• Government Cash Out or Rate and Term Refinance - This is the same as the traditional except that it is bound by Government Guidelines. For Example FHA has limited refinance transactions to 85% LTV.

As always this information is to help you gain a better understanding on what may be available to you. I strongly encourage you to consult you mortgage professional and find out your options today!

Thank you,

Matt Freeman