How to Refinance a Non-GSE Mortgage

Not all mortgages are government-sponsored enterprise loans, called GSE loans, insured by the Federal Housing Administration or another government agency like the Federal National Mortgage Association, known as Fannie Mae. Non-GSE loans require less paperwork and can often be obtained more quickly that a government-backed mortgage. They typically require larger down payments and carry higher interest rates, and after a period many homeowners want to refinance them to get better terms. Refinancing a non-GSE loan is much like refinancing any mortgage -- you pay off one loan with a new loan on better terms.

Know Your Mortgage

Know your current mortgage. Read its terms carefully to see if there are any prepayment penalties or other restrictions. Is it a fixed-rate mortgage, with the same interest rate for the life of the loan, or an adjustable-rate mortgage, called an ARM, with an interest rate that changes periodically? How much do you currently owe? When will the loan be paid off?

Have a Good Reason

Have a firm goal for refinancing, to reduce the monthly payments by extending the term or cutting the interest rate or to pay off the mortgage faster. You can switch from an ARM to a fixed-rate mortgage or change the terms of the ARM to get more favorable terms. You also can refinance to take out cash from your current equity by increasing the amount of the new loan.

Find Your Options

Check out all your options. Start by talking with you current lender about changes you would like to make, whether it's reducing interest or taking money out. Lenders often will agree to rewrite non-GSE loans on better terms, especially if they think refusing to do so would send you to a different lender. Refinancing with another non-GSE loan could save some refinancing costs, like new appraisals.

Check Assistance Programs

See if you qualify for a government-assisted refinancing program. There are two main ones: the Homeowner Affordable Refinance Program, extended in 2012 to holders of non-GSE loans, or the Homeowner Affordability and Stability Plan. Both HARP and HASP are designed to help homeowners avoid foreclosure on homes. Payments must be current and there are other restrictions, but if you're having trouble making payments, you may qualify.

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