Refinancing My Home Learn About Available Loans
When you're ready to refinance, a variety of loans are available. It's important to select a loan that's perfectly tailored to your circumstances and goals. Following is a brief overview of mortgage loan types. To learn more about each of these options, visit the Learning Center on our website or contact a Cobalt Mortgage expert.
Home Affordable Refinance Program (HARP)
The Home Affordable Refinance Program (HARP) is designed to assist homeowners with good credit standing, to refinance their mortgages - even if they owe more than the home’s current value.
Fixed-rate mortgages feature a fixed percentage rate and loan amount, so the monthly payment is the same every month for the entire length of the loan. Because of the loan's stability, it is a common type of mortgage used for refinancing.
Adjustable-rate mortgages (ARMs) have a variable interest rate and monthly payments that are recalculated on a regular basis to reflect changes in the market interest rate.
The initial rate on an ARM is fixed for a specified period. The shorter the initial fixed period, the lower the initial rate can be. The lower rate reflects the fact that the lender assumes less risk of potential increases in the market interest rate, and the borrower isn't paying for interest rate protection that he or she doesn't need. This translates into a lower monthly payment than for a similar-term fixed-rate mortgage.
The Federal Housing Administration (FHA) offers FHA-backed loans that are designed to help low- and moderate-income families. Because the FHA insures the loan, the lender can offer greater flexibility in lending guidelines. Available for single- and multi-family homes, FHA loan financing options include traditional fixed-rate products, adjustable-rate mortgages and temporary interest rate buy-downs.
The U.S. Department of Veterans Affairs (VA) offers VA-backed loans to veterans, active-duty personnel, reservists/National Guard members and some surviving spouses. When the loan is approved, the VA will guarantee part of it. The amount of the VA's guarantee usually depends on the size of the loan.
A conforming mortgage loan, often called a conventional loan, is a mortgage that is equal to or less than the loan limit set annually by Fannie Mae or Freddie Mac, the government-sponsored agencies that purchase the bulk of U.S. residential mortgages from banks and other lenders. The current conforming loan limit for a single-family home or condominium in most areas of the country is $417,000, with higher limits allowed for designated high-priced markets.
Jumbo mortgage loans, often called nonconforming loans, are designed for homebuyers who need to finance especially large purchases. A loan is considered jumbo if it exceeds the conforming loan limit, which in most areas of the country is $417,000, as defined annually by the government-sponsored agencies Fannie Mae and Freddie Mac. A variety of jumbo loan options are available, such as 30-year fixed mortgages, adjustable-rate mortgages, VA loans and FHA loans.
A reverse mortgage enables homeowners age 62 and older to convert part of the equity in their primary residence into tax-free* cash without having to sell their home or give up title.
*We recommend that you speak to a qualified tax advisor.
Visit our reverse mortgage website.