Unlike a cash-out refinance, a cash-in refinance involves the borrower putting a large sum of money into the refinancing process rather than taking it out. By paying down a significant portion of your mortgage balance, you’ll reduce your loan-to-value ratio (LTV) and increase the amount of equity you have in your home, which could result in lower monthly payments or a lower interest rate. This refinancing option tends to be best for individuals with underwater mortgages or homeowners who don’t yet have a substantial amount of home equity to access.2. Cash-In Refinance
3. Rate And Term Refinance
A rate and term refinance allows borrowers to change the interest rate and loan terms of an existing mortgage. This tends to be a beneficial option when refinance rates are lower, and a borrower can pursue more favorable terms with their lender.
The size of the mortgage loan remains the same. But depending on the changes made to the loan, you could potentially end up with lower monthly mortgage payments or pay down your mortgage faster than you’d originally planned.
4. FHA Streamline Refinance
An FHA Streamline Refinance can be a great option for homeowners with Federal Housing Administration (FHA) loans looking to lower their monthly payments and avoid a repeat of the FHA appraisal process. If you currently have a conventional loan, you won’t be able to switch to an FHA mortgage with this type of refinance.
Depending on the circ*mstances surrounding your FHA refinancing, you can choose between a credit qualifying streamline – where the lender checks your credit score and debt-to-income ratio (DTI) – or a non-credit qualifying streamline for your FHA loan.
5. VA Streamline Refinance
A VA Streamline Refinance (also referred to as VA IRRRL) is an option available to military veterans and active service members with Department of Veterans Affairs (VA) loans.
This type of streamline refinance allows VA loan borrowers to potentially lower their monthly payments and interest rates, shorten or lengthen their loan term or switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. They also pay a lower VA funding fee. If you’re a veteran, service member or surviving spouse of a veteran with a VA loan, you can likely get a VA IRRRL – you’ll just need to provide proof of residence to your lender to qualify.
6. USDA Streamline Refinance
A USDA Streamline Refinance allows borrowers of U.S. Department of Agriculture (USDA) loans with little equity in their homes to potentially lower their interest rate and change their loan term while avoiding additional home appraisals or inspections on their property.
Depending on your specific qualifications – including whether the mortgaged property is your primary residence, the age and number of payments made on your original loan, your DTI ratio and your credit score – you can choose between a USDA Standard Streamline or a USDA Streamline-Assist Refinance.
Rocket Mortgage® doesn’t offer USDA loans at this time.
7. Reverse Mortgage
A reverse mortgage is technically a type of refinancing option for borrowers over the age of 62 with sufficient equity in their homes. Borrowers who switch to a reverse mortgage don't have to make payments on their loan while they’re alive. In fact, if you were to refinance with a reverse mortgage, you’d receive funds stemming from your home equity to be used for whatever you see fit. You could use the money to fund home improvements or consolidate credit card debt.
However, it’s important to note that you’d still be expected to pay certain fees related to homeownership and your mortgage over the loan’s term. Once you sell your home or die, your loan balance will be due to your lender. The balance will either be paid through the proceeds from the sale of the home or through payments made by your heirs after a standard refinance.
Rocket Mortgage doesn’t offer reverse mortgages at this time.
8. No-Closing-Cost Refinance
With a no-closing-cost refinance, the borrower doesn’t have to pay closing costs upfront. Instead, the closing costs are covered with a higher interest rate on the loan, or they are rolled into the principal loan balance.
This type of refinance is especially beneficial for those who only plan to live in their home for a few years or need access to the funds they would typically use for closing costs to pay for expenses in other areas of their lives.
9. Short Refinance
A short refinance can be a great option for borrowers who have defaulted on their mortgage loan payments and are at risk of foreclosure.
With this type of refinance, your lender replaces your existing mortgage for a loan with a reduced balance. The monthly payments are lowered to a level you can realistically afford. You, as the homeowner, keep your property, and your lender loses less money than if the home had been foreclosed or gone through a short sale.
It’s important to note that this could hurt your credit depending on the circ*mstances surrounding the refinance. Your lender also has to approve a short refinance.
