Rate and Term Refinance Loans In Florida

What is a Rate and Term Refinance?

A rate and term refinance is a type of refinancing that enables you to replace unfavorable terms on your current loan with more favorable terms. In a rate and term refinance, you exchange your old mortgage for a new one with, ideally, a lower interest rate and a new mortgage term. This type of refinance modifies the interest rate or term of an existing mortgage without advancing new funds.

Rate & Term Refi vs. Cash-Out Refi

A rate and term refinance differ from a cash-out refinance, which puts money in your pocket at the end of the loan. The goal of a rate and term refinance is to improve your financial situation by lowering your interest rate, modifying the length of your loan, or both. You may need to meet specific credit score and debt-to-income ratio requirements to qualify for a rate and term refinance.

Advantages of a Rate and Term Refinance

Rate and term refinance offer various advantages. They include:

• Lowering your interest rate:

If current interest rates are lower than when you took out your initial loan, you can achieve a lower rate through refinancing, saving you money over the life of the loan.

• Lowering your mortgage payment:

By lowering your mortgage payment, refinancing can help you make more room in your monthly budget.

• Equity builder:

You are increasing your equity and paying down your mortgage faster. Some homeowners refinance into a shorter loan term, such as going from a 30-year mortgage to a 15-year mortgage, to speed up their payoff timetable. This can help you create equity and get out of debt more quickly.

• Saving money:

You are saving money on interest payments. You can save money on total interest paid throughout the life of the loan by refinancing to a lower interest rate.

• Suited for financial goals:

More in line with your financial objectives. Rate-and-term refinancing enables you to modify the rate and/or term of your current mortgage to one more aligned with your financial goals.

These advantages can help you improve your overall financial situation and give you more flexibility in managing your mortgage and other financial obligations.

Qualification Requirements of a Rate and Term Refinance

The requirements for a rate and term refinance vary by loan type. Some of the common requirements are as follows:

• Credit Score:

A minimum credit score of 620 is typically required for most types of loans.

• Home Equity:

Most lenders prefer that you have 20% equity in your home, but a higher loan-to-value is also acceptable.

• Debt-to-Income Ratio:

For rate and term refinances, lenders frequently set maximum debt-to-income ratio limits. The actual ratio will differ depending on the lender and loan type.

• Loan Term:

Most loans require a term of at most 30 years.

• Appraisal:

Lenders may require a property appraisal to determine the value of your home, which helps them calculate how much they are willing to lend.

These requirements ensure that borrowers can afford the new loan and that the refinance benefits both the borrower and the lender. Remember that particular eligibility criteria may differ based on the lender and the type of loan you want.

Apply for a Rate & Term Refinance with Capital Home Mortgage

Refinance your loan with Capital Home Mortgage today. Our Florida mortgage professionals will help you through the refinancing procedure. We handle all applications and fund all approved mortgages with competitive interest rates and minimal processing fees because we are direct lenders.

Capital Home Mortgage offers qualified customers in Florida competitive rates for rate and term refinancing. Call our Home Loan Experts at (239) 310-5599 to discuss your rate and term refinance.