What is Refinancing?

Refinancing is the replacement of an existing debt obligation with another debt obligation under different terms. The terms and conditions of refinancing may vary widely by country, province, or state, based on several economic factors such as inherent risk, projected risk, political stability of a nation, currency stability, banking regulations, borrower’s credit worthiness, and credit rating of a nation. 

If the replacement of debt occurs under financial distress, refinancing might be referred to as debt restructuring.

Reasons for Refinancing a Loan

***The last 3 reasons for refinancing are usually undertaken by borrowers who are in financial difficulty in order to reduce their monthly repayment obligations, with the penalty that they will take longer to pay off their debt.
  • To take advantage of a better interest rate (a reduced monthly payment or a reduced term)
  • To reduce or alter risk (for example, switching from a variable-rate to a fixed-rate loan)
  • To consolidate other debt(s) into one loan (a potentially longer/shorter term, contingent on the interest rate, differential, and fees)
  • To reduce the monthly repayment amount (often for a longer-term, contingent on the interest rate, differential, and fees)
  • To free up cash (often for a longer-term, contingent on interest rate differential and fees.

Refinance Options

  • Paying off your mortgage faster
  • Consolidate your debt
  • Get cash from your home
  • Refinance with HARP

What is FHA Streamline?

FHA Streamline refers to the refinance of an existing FHA-insured mortgage requiring limited borrower credit documentation and underwriting. Streamline refinances are available under credit qualifying and non-credit qualifying options. 

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