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Mortgage Refinance

What is refinancing?

Refinancing is the process of obtaining a new mortgage loan to replace your existing one.

When you refinance, you apply for a new home loan in the same way that you did when you purchased your home. However, instead of being used to purchase a home, the loan proceeds are used to pay off your existing mortgage balance. The debt on your current mortgage is effectively replaced by refinancing. It also allows you to customize the interest rate and loan term on your new mortgage, allowing you to get a new home loan that saves you money or helps you achieve other financial goals.

How does refinancing a mortgage work?

  • The refinancing procedure is similar to the mortgage application procedure. A lender will examine your finances to determine your level of risk and eligibility for the best interest rate.

  • The new loan may have different terms, such as switching from a 30-year to a 15-year term or from an adjustable rate to a fixed rate, but the most common difference is a lower interest rate.

  • The repayment clock on your new loan may also be reset. Assume you've been paying on your current 30-year mortgage for five years. That means you have 25 years remaining on your loan. If you refinance to a new 30-year loan, you will begin again and have 30 years to repay it. If you refinance to a new 20-year loan, you will pay off your loan five years sooner.

  • Closing costs are associated with refinancing, which can influence whether getting a new mortgage makes financial sense for you. Before you refinance, consider how long it will take for the refinancing costs to be repaid in comparison to how long you intend to stay in the home. You'll also want to make sure you can afford the new payment and that you still have enough equity in your home.

The benifit of Mortgage Refinance

  • Debt consolidation into a single monthly payment lowering the monthly repayment amount

  • A lower interest rate and more favorable terms can save you thousands of dollars in interest.

  • Paying off your mortgage and debts more quickly

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