You said you wanted to refinance your mortgage, right? Well, be prepared, there are many options available, and unlike your favorite cap, there not all one size fit all.

This excellent list, which was researched carefully, includes everything, even the fine print of each term. Before you make a call to a mortgage professional check out the option that best fits your situation.

Below are the primary options available to you when considering refinancing your mortgage

• Loan Type
• Description
• Who It’s For
• Main Advantages
• Main Disadvantages
• Fixed Rate Mortgage

A loan with fixed principal and fixed interest payments for the life of the loan

• Best for borrowers who desire a more predictable principal and interest payment throughout the life of the loan
• The fixed principal and interest portion of the mortgage payment stays the same for the life of the loan with no unexpected rises
• The fixed principal and interest portion of the mortgage payment will not go down when interest rates go down
• In addition, the portion of the monthly payment that includes taxes and insurance may fluctuate from year to year

Adjustable Rate Mortgage (ARM)

Generally, a lower interest rate to start, which translates to a lower payment. But the interest rate adjusts over time to either a higher or lower interest rate over time.

• Borrowers who are able to budget for a slightly less predictable interest rate and monthly payment.
• Take advantage of lower initial interest rates with adjusted lower monthly payments. When interest rates fall, the borrower may not need to refinance as the interest rate on their mortgage falls accordingly.
• The principal and interest portion of the mortgage payment may be unpredictable at times; payments go up when interest rates rise.

Fixed/ARM Hybrid

Integrates both fixed-rate and adjustable-rate mortgages; typically has a lower interest rate than a traditional fixed rate mortgage. The initial payment period is fixed for a specific term, after the interest rate and principal will adjust over the remaining term of the loan.

• Best for borrowers who are less financially established at the start of a loan, but plan to have more financial stability after several years. Also, for those who plan to move or refinance early.
• Gives the borrower a chance to establish financial stability before they must manage less predictable payment amounts. Requires some planning and financial advancement.

Fixed/ARM Hybrid, Interest First (Interest Only)

Payment of “interest only” reduces your monthly payment compared to a more traditional type mortgage where your payment includes both principal and interest.

• Best for borrowers who are less financially established at the start of a loan, but plan to have more financial stability after several years. Also, for those who plan to move or refinance early.
• The borrower’s interest-only payments may be tax deductible. In addition, a prepayment of principal may reduce the next monthly interest-only payment.
• There is no scheduled principal reduction during the interest-only period. In addition, when the loan enters the amortization period (or the scheduled payoff period), there will be higher payments because the loan is paid off in a short period.

Balloon Mortgage

• Often lower interest rate than a traditional fixed rate mortgage.
• First time buyers who plan to move after a few years, or someone whose career forces them to move often. Lower interest rates and simple plan for specific types of borrowers.
• After the initial balloon period (3, 5 or 7 years), borrowers may be required to pay off the remaining loan in one lump sum which usually requires refinancing.

Low and No Down Payment Loan

Several options of low or no down payment programs available. Some of these loans are best suited for borrowers with excellent credit who want to preserve their assets. Other loans are best for first-time home buyers with income limitations or area restrictions.

• Borrowers with excellent credit who want to continue their good credit record, first time buyers, and buyers with income limitations.
• Borrowers with little to no savings for up-front costs and down payments can still secure a mortgage.
• Low or no down payment loans usually require private mortgage insurance and/or higher interest rates.

LIBOR Interest-Only Alternate Loan

• Generally offers an interest rate lower than other adjustable rate loans. Payments are interest-only to start, then principal and interest. “LIBOR” stands for London Interbank Offering Rates.
• Beginning borrowers and borrowers seeking a larger-than-normal loan and expect to be able to increase payments after several years.
• Historically, the rate remains below U.S. Treasury-based ARMs. Allows more types of borrowers to qualify.
• After a predetermined number of years, monthly payments will increase and interest rates will adjust annually.

My Community Mortgage (MCM)

• A special mortgage program for borrowers making less than the average area income (HUD median income), living in specific areas and/or employed in specific fields such as health care, public safety and teaching.
• Borrowers within specific income ranges, living in specific areas and working in specific public service fields.
• Requires little money down and very little to closing costs and prepaid costs compared to conventional loans.
• Eligibility is limited, and types of properties are restricted. Borrower must occupy property as primary residence.

HomeTogether Public Safety Program

• A special home buying program offered exclusively to members of public safety. It gives access to education programs about the home buying and closing process as well as special mortgage programs.
• Members of a public safety profession.
• Requires little to no money down along with other fee waivers. Provides education and support concerning mortgages.
• Eligibility is limited.

Stated Income and Stated Asset Program

• Loan programs that require limited or reduced documentation of the borrower’s income and/or assets.
• The self employed, or those with complicated financial records.
• Traditional income and asset documentation–such as pay stubs and tax returns–is not required.
• Good credit history is required. Types of properties are restricted.

FHA Fixed Rate Mortgage

• Fixed rate mortgages generally suited for first-time borrowers and borrowers with less than perfect credit. FHA allows 100% of the cash needed to close to come from a gift. “FHA” means Federal Housing Authority.
• Borrowers who may need more relaxed credit guidelines and who have limited funds to invest.
• Gives hopeful homeowners the chance to secure a mortgage, even if their credit history is imperfect. Out-of-pocket closing costs are lower.
• Loan amounts may be limited and vary according to state, county and city. FHA mortgage insurance is required.

FHA Adjustable Rate Mortgage (ARM)

• The lower start rate on an adjustable rate mortgage may help a borrower qualify of a larger loan amount than with a fixed rate mortgage. “FHA” means Federal Housing Authority.
• Borrowers who may need more relaxed credit guidelines and who have limited funds to invest.
• Gives hopeful homeowners the chance to secure a mortgage, even if their credit history is imperfect. Closing costs are generally lower.
• Loan amounts may be limited and varied according to state, county and city. FHA mortgage insurance is required.

FHA 203k Rehabilitation Loans

• A specialty loan designed to rehabilitate properties in need of repair. “FHA” means Federal Housing Authority.
• Borrowers who may need more relaxed credit guidelines and who have limited funds to invest.
• Allows for homeowners to revitalize and improve a residence.
• Loan amounts may be limited and varied according to state, county and city. Types of properties are restricted. FHA mortgage insurance is required.

VA Fixed Rate Loans

• Low cost, fixed-rate loans. In most instances, these loans require no down payment. Veterans and their spouses.
• In many instances, no down payment is required and closing costs are covered by the gift funds or seller.
• Borrower must live in purchased property; VA loans are not available for investment properties or manufactured housing.

Refinancing

• There are several options for refinancing a mortgage; loans for refinancing are as varied as purchase mortgages.
• Homeowners with a certain amount of equity already in their homes.
• Allows homeowners to use their home equity to take advantage of low interest rates, borrow money for home improvements, or consolidate debts.
• Borrower must close the new loan and in some cases pay some or all of the closing costs.

Second Mortgage or Home Equity Loan

• Fixed- or adjustable-rate loans available for purchase or refinance transactions.
• For home purchasers who wish to avoid mortgage insurance or homeowners with a substantial amount of equity already in their homes.
• Can create lower monthly payments, or provide cash to borrowers through their own home equity. Creates opportunity to consolidate debt or commence home improvement projects.
• Increases number or amount of monthly payments.

Jumbo Loans

• Fixed- and adjustable-rate mortgages for loan amounts above the conforming limit.
• Homebuyers looking for more expensive homes or higher loan balances.
• Allows homebuyers to purchase larger, more expensive homes or homes in higher priced communities.
• Because Jumbo Loans are considered “higher risk” loans, some lenders charge slightly higher interest rates.

What Documents Do I Need Before Refinancing My Mortgage

So you’re interested in saving money by refinancing your home mortgage. Well before you seek financial services always keep in mind certain paperwork is necessary for your approval. Many homeowners attempt to prepare loan application paper work themselves while others find it more convenient to turn to mortgage professionals to complete the refinance procedure.

When considering refinancing your home mortgage the fine details of the loan application are critical. It’s also important to bring the necessary documents to ensure your loan application is approved or modified to better your circumstances. That’s why you came right?

The following items are recommended to speed up the loan process in order to complete your mortgage application for approval.

• You will need proof of income to verify your income as the borrower. Typically, you must show original pay stubs for the previous months.
• Updated copies of your W2 forms and most recent tax return are required for each loan applicant. This helps the lender verify past income history and service terms.
• You should provide a copy of homeowners insurance. Guidelines require homeowners insurance so that the lender can protect their investment.
• The homeowners insurance must be obtained before closing on your loan. Generally, coverage must at least equal the loan balance i.e. the value of the home. The lender will verify that you have current and sufficient coverage on your home.
• Make sure you provide copies of asset information. Asset information includes accounts holding money for closing costs, statements for savings and investments such as mutual funds or equity stocks.
• Finally, you must provide a copy of title insurance. Title insurance helps protect lenders from any potential liens or title disputes on the property. The title insurance is always required to close on your home.
• Additionally, you might also purchase title insurance that offers protection for you as the homeowner. This type of insurance can help your mortgage lender verify the taxes, names on the title and legal description of the property.
• Lastly, Make sure you have access to funds for closing fee associated with refinancing. Typically, it runs about two percent of the purchase price for prepaid interest to cover the time between the date you close your loan and the date you make your first mortgage payment

This will help give you a jump-start on your mortgage refinance process, your mortgage professional should also tell you which documents are needed to get approved. It’s best to gather as much information as you can and organize before you apply. It all comes down to less time that it will take for you to get approved, and close your loan.

It might feel like the economy is holding everyone down, we are sure sick of the economic doom and gloom, but you shouldn’t be. Many homeowners are taking advantage of historic low rates by refinancing mortgages.

• Right now is the best time for homeowners to refinance and capitalize on the significant interest savings.
• Other homeowners might be refinancing mortgages because they fear future interest rate increases on their adjustable rate loans, but if that’s not situation, refinancing a mortgage is likely to be a smart decision.

Listed below are five steps to help you through the mortgage refinancing process

1. Know Your Situation. Mortgage refinancing should be based mainly on the calculated numbers i.e. money saved. For example, a mortgage with an interest rate that is only 0.5% lower than your current rate can save you up to hundreds of dollars each month. Still you must consider the upfront costs involved and risks. Given this you should plan to remain in your home long enough to pass the break-even point then if necessary cash-in selling the home.
2. Gather Your Documents. Remember, most great things always come with work so be prepared to fill out a good amount of paperwork and provide credit score reports, income, tax and bank statements. You might also want to check your credit score before you apply. The best refinancing rates are only offered to borrowers with excellent credit ratings.
3. Shop around. The Internet is a powerful tool, use it to locate and research the best lenders and lowest rates available. Be sure to apply for quotes on mortgage refinance loans at least 3 or more lenders.
   1. If you already have a solid relationship with your current lender, then try there first. Once you receive an offer, compare it to several others – due diligence. Remember, you do not have to limit yourself solely to traditional banks.
   2. You might try shopping for refinancing loans from credit unions or mortgage brokers, as well.
4. Ask for statement of fees and terms prior to agreeing. All refinancing loans have up-front costs for application processing, appraisal fees and closing costs that could be several thousand dollars or more. As you compare loans, ask each potential lender for a detailed accounting of all fees associated with their financing mortgage. By law, all lenders must provide you with an estimate of fees within three days of receiving your application.
5. Stay focused on the details. After you have decided on the right mortgage loan for your needs, remember that mortgage rates fluctuate on a daily basis.
   1. To prevent the rate you were initially offered from rising, ask your lender to lock-in the rate until you close on the loan. Further, maintain enough cash on hand to cover closing costs and leave your-self a little extra security blanket savings for emergency situations.
   2. Keep in mind, the lenders estimate is not exact so you don’t want to be caught off-guard if the estimate was too conservative.

Remember, doing your homework before you step in to a mortgage refinance will save you from stress, and will prepare yourself for faster savings.

Many homeowners find themselves wanting

• To refinance at some point during the life of their loan.
• This can be for a variety of reasons including the desire to reduce the interest rate on the mortgage.
• If you are the owner of an adjustable rate mortgage and the rates are about to increase, you are probably looking at the option of refinance.
• You might be interested in refinancing now because you see that current mortgage rates are lower than what you are currently paying.

When Is The Time Right?

• Knowing the right time to refinance your mortgage can be a bit tricky.
• You need to look at the long-term rather than just focusing on the here and now.
• A good lender can help you look at all of the factors to determine if now is the right time to refinance your mortgage loan.

Closing Cost

• For instance, you will want to take closing costs into consideration to make sure that the savings on your monthly payment will be worth it.
• Some lenders offer no closing cost options, so ask your loan officer what the best deal is for your current situation.

Equity

• You also want to look at the amount of equity you have in your home.
• If you do not have enough equity or a history with your mortgage company, it can be difficult to get approved for a refinance.
• Your lender can explain the requirements that you will need to meet before you start down the road to refinancing.

Credit is King

• Credit is another part of qualifying for a refinance as most lenders are going to need to see good FICO scores to proceed.
• It is always a good idea to pull your own credit report before you apply for any kind of financing as it will allow you to see if there are any outstanding debts on your report that you were not aware of or that are errors.
• Taking care of things in advance is always the way to go.

Monthly Obligations

Refinancing can be a great avenue for getting your monthly mortgage obligations reduced which will free up more of your cash each month. As interest rates fall, more home owners are seeing refinancing as a way of creating stability in their finances. Plus, it makes no sense to pay higher mortgage rates if there is another option available to you. As with anything, though, you must weigh the pros and cons using the advice of an experienced professional.

Many are asking or are not sure what a FHA Streamline Refinance can do for them

Let us break it down.

• Many FHA Streamline loans are helping homeowners across the country refinance lower monthly mortgage payments at superior interest rates.
• In many states across the county borrowers are improving their mortgage rates.

The number one question

• What do you need to qualify for an FHA Streamline loan? Well, you need an existing FHA mortgage to start. If not you must apply to refinance your conventional loan through a FHA refinancing loan program.
• Those borrowers with conventional loans looking to refinance through a FHA loan program will need to apply for the usual credit check, employment verification, and debt-to-income ratio requirements.
• By refinancing a conventional loan to an FHA-insured refinancing loan you may get better rates and lower monthly payments.

For example, borrowers already in the FHA home loan program – the requirements for Streamline include:

• Up-to-date on current existing loans with all mortgage payments on schedule for the last year.
• You must own the original property for at least six months prior to qualifying for Streamline refinancing.
• To refinance borrowers must go through an FHA-approved lender. If you don’t want to use your current lender, any financier you choose must be approved by FHA.
• FHA Streamline loans don’t require appraisal, however no-appraisal loan cannot exceed your current loan.

All closing costs must be paid up front or coordinated through a “no-cost” FHA Streamline loan

• Borrowers can also include the closing costs with their loan for “with appraisal” FHA Streamline loans.
• Although, you must have enough equity in the home to cover the extra amount.

Another option is called the “FHA Streamline 203(k) Loan

This loan is designed for those that may want to refinance modify plans or improve the home. The 203(k) compares with the general Streamline loans with a few exceptions:

• FHA Streamline 203(k) Loans are a minimum $5,000, and maximum $35,000. It is can be added to your mortgage for weatherizing your home, removing lead paint and other home improvements that don’t include major home alterations.
• Under the Streamline 203(k) Loan guidelines, you are required to use at least one contractor to do the repair work. Self-help renovations are prohibited unless the borrower can prove he/she is an expert.
• FHA guidelines state you must get an estimate that is broken down into by the contractor into specifics including the costs of each project. The contractors must sign an agreement to do all the work outlined in the estimate for pre-determined amount and within the time line.

Borrowers must obtain all permits required by law

• Some restrictions on 203(k) Streamline refinancing loans include no major structural repairs such as altering a load-bearing wall or work that needs architectural plans.
• Home improvement work that exceeds $15,000 requires third-party inspection after the job is done and certifications submitted to FHA.

Under FHA guidelines

• Borrowers are permitted to make two payments to each contractor
• If you do the work yourself as an “expert”, same rules apply

While borrowing under FHA Streamline 203(k) programs, you must “close out” the loan when by furnishing a “mortgagor’s acknowledgement of satisfactory completion, mortgagee’s inspection report(s), change orders, mortgagee accounting of the escrow funds, and record of disbursements.”

With all of the FHA programs above, it’s very important to keep accurate records in order to prove the work was completed according to agreement within the scheduled timeframes.