Refinancing My Mortgage [guide2mortgage.blogspot.com]
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Refinancing a mortgage is essentially replacing your current mortgage with another. When refinancing your mortgage you have two possibilities. The first is to simply set up a new home loan for the amount of the outstanding balance on your current mortgage. That is, you owe $ 150,000, so you go and borrow $ 150,000. The other option is called cash-out refinancing and works the same, only you borrow more than what is owed.
Refinancing can be the answer to a number of situations:
If interest rates are lower today than when you took your mortgage out, refinancing may offer you the opportunity to dramatically reduce your repayments, allowing you to free up more cash for savings or to spend on other debts or projects. If you want to reduce your repayments, extending your loan term is an option. You should be aware that extending the term of any loan will have an effect on the total amount of interest you end up paying. It is wise to give this some thought if you plan to save any spare cash created from this refinancing. If you are in need of some spare cash to pay off debts, and you have enough equity, you can borrow more than the outstanding balance of your mortgage to pay off these debts. If you have two loans and wish to consolidate them, refinancing offers a way to amalgamate the two loans into one. If you are on a variable rate mortgage and wish to lock in a lower interest rate, offering you fixed monthly payments, then refinancing your mortgage will let you start afresh in this way. If you took the mortgage out with a low equity rating, the chances are you will be paying for private mortgage insurance or be on a higher interest rate. Refinancing can give you the option to drop PMI or move from this higher interest rate.
If refinancing sounds like it is the right option for you, you should go and request a number of no-obligation quotes from lenders and brokers.
