There are several types of refinances available, including:
- Rate-and-term refinance: This is the most common type of refinance, where a borrower replaces an existing mortgage with a new one with different terms, such as a lower interest rate or a shorter term.
- Cash-out refinance: This type of refinance allows a borrower to take out a new mortgage that is greater than their existing mortgage, and receive the difference in cash. This can be used to pay off high-interest debt, fund home improvements or other expenses.
- Streamline refinance: This type of refinance is available to borrowers with an existing FHA or VA loan and allows them to refinance with minimal documentation and paperwork.
- Consolidation refinance: This type of refinance is used to consolidate multiple loans, such as a first mortgage and a home equity loan, into a single loan with a new interest rate and payment schedule.
- Cash-in refinance: This is a type of refinance where a borrower puts additional cash towards their existing mortgage to lower their loan balance and monthly payments.
The type of refinance that’s best for a borrower depends on their individual financial situation and goals. It’s important to carefully evaluate the costs and benefits of each option before making a decision.