When Must You Refinance
A Brief Introduction to Refinancing
Refinance means replacing your current mortgage with a new loan that has a more favorable interest rates and terms that you can afford to manage. The new loan is secured on the same property as your current loan. The new loan funds are used to pay down the current mortgage, while any remaining money can be used to your best advantage. For example, Mr. ABC and Mr. XYZ both took out a mortgage loan worth $400,000. After 4 years, both of them paid off $200,000. Mr. ABC then took out another home loan worth $200,000 in order to repay the existing loan balance. On the other hand, Mr. XYZ took out another mortgage worth $300,000 in order to repay the unpaid loan balance which is $200,000. Mr. Y could use the remaining balance in order to fulfill other financial obligations. The first scenario is a simple refinance while the second is that of a "cash-out refinance".
If you're thinking of refinancing your house the reasons why a mortgage refinance might be right for you is to save more, pay down your mortgage quickly, you need extra cash to pay off credit cards, to consolidate two loans into one or to convert an Adjustable Rate Mortgage (ARM) into a Fixed Rate Mortgage (FRM). Hence, when you are looking to refinance your home, you should think of it as starting from square one. This simply means that
refinance costs will be very similar to those of the original loan. There are a variety of things that will determine the overall refinancing cost. Applying for a mortgage refinance will require you to pay for the origination fee, application fee, closing costs, and other fees. A re-assessment of the value of your property will also be needed and this too comes with a price. The amount of time you have lived in your home, current balance on your mortgage and your home's current market value. After going through your current loan status, you will then need to pay any costs that are associated with the initial home buying process.
If you are drowning in a pool of debt and looking for a way to swim back to shore, refinance mortgageloans may just be the thing you need. What isrefinance mortgage loan?Refinancing
your mortgage loan simply means taking out a new loan. This means borrowing against equity or the value of your home and using the
money for any reason, whether it is paying out your credit card debts or your first mortgage. Refinancing your mortgage will give you the advantage of handling only one loan payment instead of, say, a couple of credit card debts and your home loan. Think of it as a way of consolidating your current debts or simplifying your bills. You also have to option to reduce your interest rate and shift your mortgage term or your loan program into one that will serve your current financial situation. If you want to pay off your debt in five years instead of ten, you can have your lender adjust your mortgage term while still giving you a reasonable rate. In short, refinancing makes sense for the right reasons and at the right time. You need to decide whether to opt for a simple interest rate adjustment refinance or a refinance that will provide you with extra money.
by: Ask Bill
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