Mortgage Refinance Options
Whether you're looking to lower your monthly payment, access home equity, consolidate higher-interest debt, change your loan term, or refinance an investment property, there are several refinance options available depending on your goals, equity, credit, income, and current mortgage.
Rate & Term Refinance
A rate-and-term refinance replaces your existing mortgage with a new loan, generally without taking significant cash out.
Potential Benefits
- Potentially lower your interest rate
- Reduce your monthly mortgage payment
- Change from an adjustable-rate to a fixed-rate mortgage
- Shorten or extend your loan term
- Potentially reduce total interest expense over time
- Change from one loan program to another when appropriate
Add a caution: refinancing has closing costs, so the savings should be compared with the cost of refinancing.
Cash-Out Refinance
If you've built equity in your property, a cash-out refinance may allow you to replace your current mortgage with a larger loan and receive a portion of your available equity in cash.
Homeowners may use funds for purposes such as:
- Home improvements or renovations
- Major expenses
- Investment opportunities
- Education expenses
- Consolidating eligible debts
- Other financial goals
The amount available depends on your property's value, existing mortgage balance, credit, income, occupancy and applicable loan guidelines.
Debt Consolidation Refinance
Homeowners with sufficient equity may consider using a cash-out refinance to consolidate higher-interest debts into their mortgage.
For example, funds may be used to pay off eligible:
Credit cards • Personal loans • Other higher-interest obligations
This can potentially reduce monthly debt payments, but there's an important tradeoff: unsecured debt may become debt secured by your home, and extending repayment over a longer period can increase total interest paid. I would definitely include that disclosure.
Investment Property Refinance
Real estate investors may have several refinance choices, including:
- Conventional investment property refinance
- DSCR refinance
- Non-QM refinance
- Cash-out refinance
- Rate-and-term refinance
For eligible DSCR programs, qualification may focus primarily on the property's rental income and applicable housing expense, rather than traditional employment income.
Is Refinancing Right for You?
Refinancing isn't automatically beneficial just because a lower rate is available. We can compare your existing mortgage with potential refinance options, including the new payment, closing costs, loan term, equity position and your financial goals.
