7 types of refinance mortgage loans
Different types of refinancing loans are available, and you can opt for the one that best suits your needs.
- Adjustable rate mortgages (ARM): This type of mortgage carries a fixed interest rate for 5 or 7 years, then changes each year depending on the market index. Adjustable-rate mortgages typically start with a lower monthly rate than fixed-rate loans, but then, once the fixed rate period comes to an end, the loan rate can either go up or down depending on the market conditions. If you opt for ARM, you should be financially prepared for fluctuations in the payment as well as interest rates.
The loan’s tenure is around 10 to 30 years. The fixed rate loan protects you from unexpected hikes in payments which makes them a safe bet. HARP refinance program: This program is also for those borrowers who owe more than their house’s worth. One needs to follow a streamlined, low documentation process to get approval for this type of refinance mortgage loan. USDA Streamlined Assist: This is a new refinance loan project whose application process is quite simple. The eligibility to qualify for this loan is quite relaxed, and it also ensures dramatically low fees for existing USDA borrowers. VA mortgage payments: This mode of refinance mortgage loans is specifically for veterans. It is approved by the Federal Government and issued by approved lenders. They come with flexible guidelines to ensure that veterans can afford their dream homes.
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