Refinancing is when a homeowner gets a new mortgage loan to replace their current loan. Most people refinance to lower their interest rate and reduce their mortgage payments, often saving thousands in mortgage interest.
Accordingly, does refinancing hurt your credit?
Taking on new debt typically causes your credit score to dip, but because refinancing replaces an existing loan with another of roughly the same amount, its impact on your credit score is minimal.
Furthermore, is there a federal mortgage refinance program?
The federal government also offers mortgage relief via the FHA, VA, and USDA Streamline Refinance programs. These low–doc refinance loans don’t require a home appraisal, so homeowners can refinance even if they have very little home equity or if their home values have fallen.
What are the two types of refinance?
There are two general types of mortgage refinancing: Rate-and-term refinance. Cash-out refinance.
HIRO is short for “high LTV refinance option” — a special refi program run by Fannie Mae. If you have very little equity, but want to refinance into today’s low mortgage rates, you might be able to use this loan to your advantage. It could help lower your rate and make your monthly mortgage payment more affordable.
If you can afford to pay a higher monthly payment and you are anxious to pay off your loan, refinancing can help. With interest rates so low, you can shorten the term of your loan while only increasing your monthly payment slightly.