Reducing Your Payment by Refinancing
Mortgage rates are constantly changing and the interest rate at which you closed your loan years prior may be significantly higher than where rates are today. Many homebuyers look to refinance their existing mortgage in order to take advantage of lower interest rates and effectively reduce their monthly payment in the process.
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How to reduce your monthly mortgage payment by refinancing?
There are generally two ways that you can reduce your monthly mortgage payment by refinancing.
- Refinance a new loan with a lower interest rate
Even if the market is not currently in a low rate environment or experiencing a “refi boom,” there are generally many people who can benefit from a refinance when homeowners refinance in large numbers. If you had credit issues when you took out your existing mortgage that have since been resolved, you may now qualify for a lower rate. Similarly, if you took out an adjustable rate mortgage and the rate has adjusted higher over time, you may be able to obtain a lower rate by moving to a fixed rate loan.
- Refinance a new loan with a longer term
If you still have 10 or 15 years remaining on your current mortgage, you may be able to lower your monthly payment by refinancing and taking out a 20 or 30 year home loan. By spreading out the time over which you repay the loan you can often reduce the amount you pay each month. Keep in mind you are likely to pay more interest over the life of the loan by taking more time to pay it off.
Factors that impact loan approval
When applying for a refinance loan, factors that impact loan approval may include:
- Credit history
- Other debts
- The value of the home
- The proposed loan amount
- Loan type
Your eLEND mortgage expert can review the specifics of your scenario and help determine the best options.
Available Refinance Mortgage Programs
eLEND offers the following refinance mortgage programs:
- Conventional Fixed Rate Mortgages – A fixed interest rate means your payment will stay the same for the life of the loan.
- FHA Loans – Offers low down payment options and lenient credit requirements.
- VA Mortgages – No money down financing options for eligible military veterans, active duty servicemen and women, and surviving spouses.
- USDA Rural Housing Loans – Offered to borrowers purchasing homes in designated rural areas. The zero money down option makes it a popular choice for first time home buyers.
Fixed rate loans can be used to refinance a primary residence, second or vacation home, or an investment property. Refinancing is also available for single family homes, condos, manufactured homes, and multi-family properties.
We understand how difficult it can be to achieve home financing. That’s why we these developed educational tools to help aid in your understanding of the mortgage process: