Mortgage Refinance

Mortgage Refinance: Cash-Out and Rate-and-Term Options

While buying a home is a huge investment, it’s important to remember that the mortgage you sign is not the one you must live with forever. Clients of the BBC Group refinance for many reasons. Some switch from an adjustable interest rate to a fixed interest rate. Others have improved their credit score or financial standing since they first got their mortgages, and now they want to secure a better rate. Still others want to make use of the home equity they’ve built by exchanging it for cash in hand. Whatever the reason you’re considering mortgage refinance, our financing professionals have you covered. We’re located in Anaheim, CA, serving clients locally and in nearby Riverside, Long Beach, and Carson, California. When you’re ready to see what you could be saving, contact us to get started.

There are two main divisions of refinance: rate-and-term refinance and cash-out refinance.

Rate-and-Term Refinance

Rate-and-term refinance, as its name implies, is designed to lower your interest rate, change your current term (length of repayment), or both. This type of home refinance does not increase the value of your loan, and it does not pay out cash to you. For this reason, it’s sometimes also called a no cash-out refinance. Rate-and-term refinancing is available for conventional loans, jumbo loans, FHA loans, VA loans, and more.

Rate-and-term refinance is popular among borrowers who have a loan with an adjustable-rate (ARM). While ARMs may have low interest payments at first, these increase greatly after a certain amount of time has passed. By switching to a fixed rate, our rate-and-term refinancers can plan better for the future and feel more stable about their mortgage payments.

As mentioned, we often see clients who have improved their financial status since first acquiring their mortgages. Clients who get an FHA loan, for example, may have selected this type of loan because of its easy qualifying requirements. As their credit score, debt-to-income, or other financial markers improve, clients may be able to secure a better interest rate. Rate-and-term refinance is a great option to consider in this case.

Cash-Out Refinance

This refinance solution replaces your existing home loan with one with a higher value and gives you cash in exchange for it. A cash-out refinance creates a new mortgage that is the combined value of your old mortgage and the cash you receive at closing.

All types of clients turn to cash-out refinance to make use of the home equity they’ve built. Clients use this cash for home renovations, to pay off high-interest credit cards, to pay for a child’s college tuition, and for all types of other reasons.

It’s important to note that cash-out refinance is only available to borrowers who have already built up a substantial amount of equity in their homes. Lenders use this equity as security in the case that a borrower defaults on the loan.

Learn More About Mortgage Refinance Today

It’s important to note that you can refinance both conventional (privately insured) and nonconventional (federally insured) mortgages. We’d love to talk to you about your unique circumstances and determine if a rate-and-term or cash-out mortgage refinance makes sense for your goals. If you live in Anaheim, Riverside, Long Beach, or Carson, schedule a consultation with our mortgage professionals and see how you could save.