Answering Your Mortgage Refinance FAQs
At Associates Home Loan of Florida, Inc., we’re proud of the home financing and refinancing solutions we find for our clients. We have a full range of conventional and nonconventional refinancing options, and we’ve been around long enough to know some of the common questions our clients have. In this week’s blog, we’ll give answers to mortgage refinance FAQs. If you live in Tampa or nearby Florida and you’d like to learn more, please contact us for help.
What’s the purpose of mortgage refinance?
Mortgage refinancing has different purposes for different people. Rate-and-term refinance can help you get a better interest rate, a lower monthly payment, transition from an adjustable to a fixed rate, or pay off your mortgage faster. Cash-out refinance, on the other hand, allows clients to trade in some of their home equity in exchange for cash in hand. These clients use this cash for all types of purposes – paying off high-interest credit card debt, paying for college, or otherwise.
How much equity do you have to have to refinance?
It depends what type of refinance you want. For a cash-out refinance, you can only take as much cash out as you have in equity in your home. For a rate-and-term refinance, most lenders require 20% equity, although certain nonconventional loans like VA and FHA loans allow you to refinance with less equity.
Do you have to refinance your mortgage with the lender with whom you got your initial mortgage?
No. You may find that your existing lender will offer you a good deal, in many cases, because the lender wants to keep your business. Your existing lender may also consider waiving some of the closing costs for your new mortgage, as well. We also encourage homeowners to look at other lenders and compare rates and terms.
Do I have to go through the same approval process for a mortgage refinance as an original mortgage?
It depends. If you have a nonconventional loan like a VA loan or FHA loan, you typically won’t have to go through the same approval process as you did when you first applied. FHA Streamline refinance and VA IRRRL refinance are two types of refinance with minimal new paperwork or approval requirements. For conventional refinancing, you may need to submit to a new credit check and have a new appraisal done on your home. The better your credit score and finances are compared to when you first got your mortgage, the better.
Contact Us to Learn More
We’re glad you took the time to find answers to mortgage refinance FAQs. When you’re ready to learn more about the process, the team at Associates Home Loan of Florida, Inc., is here to help. We work with clients in Tampa, Sarasota, Orlando, and nearby Florida communities.