REFINANCE CLOSINGS
Mortgage Refinancing involves paying off the existing mortgage by taking out a new mortgage, presumably with better terms than the one being paid off. That may include a lower interest rate for example. Or possibly the borrower has improved their credit rating and is able to obtain a lower interest rate with a new mortgage. If a homeowner intends to stay in their home for the extended future, then refinancing the mortgage could be a good idea.
Different Types of Refinance Transactions:
The Cash-Out Refinance: This is a refinance transaction where the homeowner reduces the amount of equity in their property in exchange for cash and better mortgage rates. The homeowner receives cash from the refinance at the Closing, which the homeowner can use for their purposes such as paying down debt or home improvements.
The Cash-In Refinance: The Cash-In refinance is where the homeowner takes out a new mortgage but also contributes cash in the refinance closing transaction. This reduces the loan debt and can help the homeowner with more favorable new mortgage loan terms.
Streamline Refinance: For homeowners with FHA (Federal Housing Administration), VA (veterans Affairs), or USDA (U.S. Dept. of Agriculture) loans, the option of refinancing their mortgages may be available. The homeowner can apply to lower their mortgage payments and pay off their home faster.
Reverse Mortgage: for homeowners over the age of 62, reverse mortgages may be available. A reverse mortgage transaction basically allows the homeowner to grant a mortgage on their home without the requirement for the homeowner to make any monthly mortgage payments to a lender who in turn will pay the homeowner a sum of money, either lump sum or via monthly payments. In exchange, the mortgage has to be paid off when the home is sold or the homeowner passes away. A reverse mortgage is a way for a homeowner to take out the equity in their home. The most typical reverse mortgage is the Home Equity Conversion Mortgage (HECM), which was established by the U.S. Government through the Federal Housing Administration program.