A blended rate is an interest rate applied to a refinanced loan that is higher than the rate on the old loan but lower than the rate offered on new loans. It is generally offered by the lender to induce homebuyers to refinance existing low-interest rate loans as an alternative to assuming the existing loan.
Equity takeout refers to the process of refinancing a property mortgage primarily to raise cash. This results in an increase in the debt secured by the property while leveraging the equity built into the home.
Flipping a loan involves repeatedly refinancing an existing mortgage, often luring the borrower with seemingly better interest rates while charging substantial fees for the new loan and prepayment penalties for the old loan. This predatory lending practice can lead to excessive debt and ultimately default and foreclosure for the borrower.
HARP, launched by the Federal Housing Finance Agency (FHFA) in March 2009, aims to assist homeowners who are underwater on their mortgages with refinancing options to obtain more favorable loan terms.
Launched in March 2009 by the Federal Housing Finance Agency, the Home Affordable Refinance Program (HARP) was designed to help underwater and near-underwater homeowners refinance their mortgages. Unlike the Home Affordable Modification Program (HAMP), which assists homeowners at risk of foreclosure, HARP targets homeowners who are current on mortgage payments but cannot refinance due to declining home prices.
A Renegotiated Rate Mortgage (RRM) allows borrowers to renegotiate the interest rate of their existing mortgage, often providing an opportunity to lower monthly payments and overall interest costs.
A Yield Maintenance Prepayment Penalty ensures lenders are compensated for the potential loss of interest income if a borrower pays off a loan early.
