Should I refinance? This is a question I get asked quite often and typically what surprises me most is what sparks the interest. I get a lot of calls from my past clients when they receive one of those ridiculous mail offers that pretend to be either some top secret government refinance program or someone connected with their current mortgage. These offers typically boast some unbelievable interest rate. You can get 2.95% fixed for 30 years, of course it is absolutely absurd but if you don’t know much about mortgages it sounds really good!
So obviously if you are taking your time to read this something has sparked your interest in refinancing! I want to help you answer all the questions you might have about refinancing. I can’t do that in one blog post, but I can at least get you started in the right direction. The best place to start is to get a basic understanding of what is possible with different loan types. Let’s take a quick look at the 5 primary kinds of mortgages.
If you have a conventional mortgage you might be able to take advantage of Fannie Mae’s DU Refi Plus program. This program will allow you to refinance your current loan with no PMI if your current loan didn’t require it when you purchased your home. Typically on a conventional mortgage you can not borrow more than 80% of what the home appraises for or you are required to pay for PMI (private mortgage insurance). With DU Refi Plus even if your home appraises lower that what you originally paid for it you can still refinance without the PMI!
To find out if you loan is owned by Fannie Mae CLICK HERE.
FHA has a streamline refinance. This program used to be offer an almost “no questions asked” refinance, but now the lender does have to verify a few things. You have to be current on your monthly payments and most lenders require no 30 day late payments within the past 12 months. You do not have to have an appraisal done but if you don’t your loan amount is limited to your original total loan amount plus the new FHA upfront MIP fee, which is 1%. That might mean you have to bring a little cash to closing.
VA also offers a streamline program but it is called an IRRRL or Interest Rate Reduction Refinance Loan. That is because it used to be more like an interest rate reduction than a full refinance, but just like FHA, guidelines have gotten a little more strict. Some lenders will still allow you refinance without an appraisal but some will require it. The good news is that with the VA IRRRL you can roll in your closing costs and VA charges a much lower funding fee than what is required for a purchase loan.
USDA also offers a great refinance option. You can roll in costs and take advantage of lower rates but the downside is that you can only use USDA to refinance an existing USDA loan.
JUMBO mortgages are more investor specific. This means that each lender will probably have slightly different rules and limitations. Typically JUMBO mortgage require more equity and be prepared for added valuation procedures. Due to current market conditions you might be required to have 2 appraisals done or one appraisal and an appraisal review.
If you would like a FREE refinance analysis please give me a call at 980-721-7478!