In simple terms a mortgage refinance is when you negotiate different terms of your loan to what you currently have. it is in effect taking out another loan that takes the place of your elderly loan. This is usually most utilized in times of low interest rates as it provides the greatest benefit (refinancing your home mortgage in today's market is a great opportunity as interest rates are at record lows). Refinancing for a lowered interest rate is the most common reason for a refinance, but there's others. Outlined below is two reasons why refinancing for a lower interest rate can help you.
What exactly is a mortgage refinance? Well in this article they explain a little bit about what a mortgage refinance is and also outline two ways in which it can be an advantage to you.
Reduce the life of your loan - You can in effect save a lot of money by reducing the term of your loan. If you got a mortgage 5 years ago on a standard 30 year loan at a high interest rate you can refinance this loan to reduce the term. you have already paid off 5 years, and refinancing at a lower rate, but keeping the level of payments you're making now, you may be able to shave 10 years off the loan. This will save you a bundle of money if done properly.
Advantages:
Reduce monthly repayments - If you're struggling to pay off your loan at the moment I would seriously consider getting a remortgage. If you obtained your mortgage an inflated rate you can refinance your loan and have lower monthly repayments to deal with which will help a great deal. You may not be able to reduce the life of your loan at the same time (sometimes this is possible but not always) but you can surely save some money on the repayments.
Make sure you understand all the cost involved with refinancing your mortgage loan as there is usually some fees involved. You need to weigh up the benefits of the refinance against the costs and decide if it is something you are willing to do.
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