Are you looking to lower the rate or monthly payment on your mortgage? Or maybe you have a sizable amount of home equity you’d like to tap into? Either way, a home refinance loan could be a smart financial move.
loanDepot is a reputable lender that offers a variety of options that could work for you. It’s accredited by the Better Business Bureau (BBB) with an A+ rating and currently serves over 27,000 customers each month. The lender has also refinanced more than $179 billion in mortgages since its inception in 2010.
Read on to learn more about home refinancing, how it works, and how loanDepot may be able to assist you with your home refinance loan needs.
Refinance Your Home Loan to Save Money
What Is Home Refinancing?
Home refinancing entails swapping your current home loan with a new one to lower your interest rate and reduce your monthly payment. Some homeowners also refinance their homes to convert equity to cash and consolidate high-interest debt, make a big-ticket purchase or meet another pressing financial goal.
How Home Refinance Loans Work
Like home purchase loans, refinance loans require you to go through the underwriting process to get approved. You’ll have to submit a formal application and send along income and asset documentation to be considered for a home refinance loan.
Here’s a breakdown of how the process works:
- Apply for a home refinance loan.
- Upon approval, the lender pays off your existing loan.
- You begin making mortgage payments to the new lender until your loan is paid in full.
Be mindful that you’ll pay more in interest over the life of the loan if the lender resets the loan term. The upside is your monthly payment could be lower and more affordable.
Or, if your credit score has improved since you took out the initial home loan, you may potentially qualify for a far lower interest rate. This means you could still save on your monthly payment without resetting the loan term.
Why Refinance A House?
Convert to a Fixed-Rate Mortgage
You can switch from an ARM to a fixed-rate mortgage to get a lower, set interest rate and a more predictable monthly payment.
You can pull cash from the equity you’ve built up in your current loan to eliminate high-interest debt.
Get Cash For A Major Expense
Some homeowners use cash-out refinance loans to cover the cost of major expenses or make a big-ticket purchase.
Refinance Your Home Loan to Save Money
Types Of Home Refinance Loans
A fixed-rate mortgage comes with an interest rate that doesn’t change over time and a 30, 20, 15 or 10-year loan term. Consequently, your monthly mortgage payment (principal and interest only) will be more predictable.
Adjustable-rate mortgages (ARMs) feature low interest rates at the beginning of the loan term, followed by rate increases over time. They’re most suitable for borrowers who plan to move or refinance their mortgage in a few years. Some homeowners also get ARMs to save money in the beginning and focus on meeting other pressing money goals.
You can choose from a 10/1, 7/1, 5/1 or 3/1 ARM. The first number represents the number of years the interest rate is fixed. The second number is the frequency at which the rate will change following this period. To illustrate, if you get a 3/1 ARM, your rate will stay the same for three years and could fluctuate each subsequent year over the life of the loan.
VA loans are reserved for active-duty military and veterans who meet the eligibility criteria. They’re backed by the U.S. Department of Veterans Affairs and feature competitive rates and 100 percent refinancing.
FHA loans are backed by the Federal Housing Administration. These mortgage products are suitable for homebuyers with lower credit scores or who can’t afford to make a hefty down payment.
You can also refinance your current loan with one of these products:
- FHA streamline refinance: a flexible loan program with less stringent guidelines and minimal document requirements that lets you reduce your mortgage payment
- FHA cash-out refinance: convert your equity into cash and use the loan proceeds however you see fit
Refinance Your House With loanDepot
If you’re ready to refinance your home, consider loanDepot to meet your needs. It offers competitive refinance rates, faster approvals and closing times that are faster than the industry average.
Get started by using the online form to connect with a loan officer in your local area.