Reasons for a Borrower to Streamline a Refinance Mortgage

A streamline refinance project utilises the mortgage approval and underwriting facets of the first mortgage. This accelerates the process of acquiring the refinance and reduces the closing costs. You may opt for a streamline refinance of avail of several benefits.

Lower Overall Costs

In a streamline refinance, the underwriter uses the details presented by the borrower for the original mortgage. Hence, a streamline package calls for lower closing costs compared to that required by an ordinary refinance. This lowers the upfront payment for the borrower significantly.

Like an ordinary refinance, a streamline lowers the monthly mortgage repayments. You may switch over from a fixed rate to a variable rate, or the other way around. A variable rate is generally lower than a fixed rate. If your mortgage term doesn’t have long to run, you may take on a variable rate mortgage to press the advantage offered by the prevailing low rates. On the other hand, if your mortgage term is still fairly long, a slightly higher fixed rate is a better option. A variable rate mortgage may show an upward trend making payments unmanageable later.

Get out of Balloon Payments

Balloon loans are loans with a fixed interest rate over a short term. Lower interest rates make for moderate monthly payments. However, you will need to pay a lump sum at the end of the term, which may pose an inconvenience. If you have taken a balloon mortgage, you may opt for a streamline refinance. This provides enough funds to recompense the balloon payment and replace it with a fresh scheme with more favourable terms. It is vital to get quotes from several lenders to obtain the best deal for you..

Get Rid of Private Mortgage Insurance

A homeowner may secure a mortgage with low or even zero deposit towards the cost of the home. Unfortunately, the lender will require the borrower to pay private mortgage insurance (PMI) premiums every month, until the individual achieves 20% equity in his home. A borrower gains equity by paying the scheduled monthly mortgage payments. PMI payments protect the lender from a possible loan default by the borrower. The payments do not add to the equity in the home in any way, and can cause financial hardship to the homeowner. You may take advantage of features afforded by streamline refinancing like low interest rates to make prepayments of the mortgage interest to achieve equity in your home quickly. This can help you dispose of PMI payments swiftly.

Deciding on an Escrow Account after a Refinance

The monthly mortgage dues of a borrower consist of homeowner’s insurance, private mortgage insurance and property taxes apart from the mortgage principal and interest payments. Lenders require that you pay the insurance amounts and the property taxes in an escrow account held by a third party called escrow services....

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HUD Guidelines for Manufactured Homes

A set of directives prepared by the Department of Housing and Urban Development (HUD) may have served to enhance the quality of manufactured homes. Homebuyers are quite willing to apply for mortgages for this highly affordable quality of housing. Here are the key guiding principles put forward by the...

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