Refinancing to Lower Monthly Loan Payments
by: John Mussi
It can be frustrating to go through the loan process only to have interest rates or payment terms to change drastically within a year of you signing the loan papers.
Of course, depending upon the type of loan that you applied for and the loan terms that you agreed to there might not be many options available to you other than simply paying off the loan as quickly as you can? in most cases, however, you'll likely be able to refinance the loan in order to lock in the new lower interest rate or modified repayment terms.
Here is some basic information on what refinancing is and how it works, as well as whether or not the time is right for you to refinance your loan.
What Refinancing Is
Basically, refinancing is the act of applying for a new loan in order to cover an older loan. Generally it is done in order to get a lower interest rate or to alter the overall payment plan associated with the original loan, though there may be other instances where refinancing a loan can be useful as well.
Examples of these occasions might be when taking over the payments on a loan for another individual, eliminating a cosigner from a loan, or renewing a loan that was coming due in the near future so as to get more time to repay it. Of course, you may have other reasons for refinancing as well.
How Refinancing Works
As mentioned above, refinancing allows you to replace the interest rates and payments of an older loan with a new set of rates and terms. While many people consider refinancing to simply be a renegotiation of the original loan terms (since it uses the same collateral and the amount remaining to be paid on the original loan), a refinance loan is actually a separate loan.
When you apply for a refinance loan, you're applying for a loan for the amount that remains on the previous loan or in some cases, an additional amount.
The money that you receive goes toward the original loan payment, usually paying it off in full? you are then left with the new payment plan on the refinance loan, paying the interest rate of the refinance loan instead of the original loan.
Because it is a separate loan, refinance loans can even be applied for from a different bank or lender than the original loan a useful feature if you can find a lower interest rate elsewhere or simply wish to change the bank or lender that you're doing business with.
Deciding Whether or Not to Refinance
It can be difficult at times to decide whether or not you should refinance a loan. Interest rates tend to fluctuate throughout the year, though the difference in a new rate and your current rate might not be enough to warrant refinancing your original loan especially if the rate is likely to drop lower soon. Hesitating too long or refusing to refinance when the time is right can end up costing you additional money in the long run, however.
When trying to determine whether or not the time is right to refinance, you should look at your situation and weigh the benefits of refinancing.
Look at the amount of time that you've had the original loan? if it's only a few months to a year, you probably shouldn't refinance unless a spectacular deal presents itself.
Compare the interest rates from your current loan and the refinance loan? do the same with the monthly payments. With careful consideration, you'll find the answers that you're looking for one way or another.
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You may freely reprint this article provided the following author's biography (including the live URL link) remains intact:
About The Author
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.
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Refinance Mortgage Lenders - Finding The Best Refinance Lender
Refinance Mortgage Lenders - Finding The Best Refinance Lender
by: Carrie Reeder
Finding a good lender to refinance your mortgage can be almost as important a decision as the actual mortgage you choose. In order to make a wise selection of a refinancing lender you should do four things:
1. Know the objective of your mortgage refinance
Do you want to lower your current interest rate? Generally, refinancing your mortgage can be profitable if your current mortgage is 2% higher than the prevailing rates. Do you want to move from an adjustable rate mortgage (ARM) to a fixed rate mortgage?
If interest rates are creeping up this may be a good idea. Do you want to shorten the term of your mortgage to accumulate value more quickly? Do you want to take cash out of your home?s equity? The mortgage refinance lender you pick will want to know your reason for refinancing so that the appropriate mortgage product can be chosen. You will also want...
Refinance Mortgage Lenders - Finding The Best Refinance Lender
Refinance > Refinance Mortgage Lenders - Finding The Best Refinance Lender
1st And 2nd Mortgage Refinance Loan
1st And 2nd Mortgage Refinance Loan
by: Carrie Reeder
Refinancing a first and second mortgage requires some extra considerations. Depending on your equity, you may find that combining the two mortgages results in a higher interest rate. You may also find that you have to carry PMI with the refinanced mortgage.
Will Refinancing Benefit You?
Refinancing two mortgages allows you to consolidate your loans into one payment, often lowering your monthly bill. You may also find lower rates under the right circumstances.
Those with a large amount of equity benefit most from consolidating loans since they qualify for the lowest rates. It is important to look at interest savings, not just monthly numbers which can be misleading.
However, if you have less than 25% equity, you may end up qualifying for higher rates. With less than 20% equity, you will also have to pay for private mortgage insurance. Even with these factors, you may still...
1st And 2nd Mortgage Refinance Loan
Refinance > 1st And 2nd Mortgage Refinance Loan
A Mortgage Refinance with Bad Credit - The Pros and Cons
A Mortgage Refinance with Bad Credit - The Pros and Cons
by: Monique Thomas
To many, the term 'bad credit' is the end of the world when it comes to getting financing in the near future. However, it doesn't always have to be like that, you can take the bad credit mortgage refinance option!
Mortgage refinance vs. equity finance
It is essential at the outset that you understand there is a fundamental difference between mortgage refinancing and equity financing. Basically, with equity financing you are using the surplus amount you may have stored up in your property between your outstanding mortgage amount and the appraised value of your home. However a mortgage refinance is where you find a new lender willing to lend you the whole appraised value of your property, the sum of which you then use to repay your existing mortgage lender and the remaining sum you can utilize in any manner you wish. Because of this, you are faced with a different...
A Mortgage Refinance with Bad Credit - The Pros and Cons
Refinance > A Mortgage Refinance with Bad Credit - The Pros and Cons
Cash-Out Mortgage Refinancing
Cash-Out Mortgage Refinancing
by: LendingTree Editorial Staff
Your house is a potentially large source of ready money if you are willing to sacrifice some of your equity in return for liquidity. Cash-out mortgage refinancing is one way to access this cash.
What is cash-out mortgage refinancing?
Cash-out refinancing involves refinancing your mortgage for more than you currently owe and pocketing the difference. If you have been paying down your mortgage for some time, then the principal on your mortgage is likely to be substantially lower than what it was when you first took out your mortgage. That build-up of equity will allow you to take out a loan that covers what you currently owe -- and then some.
For example, say you owe $90,000 on a $180,000 house and want $30,000 to add a family room. You could refinance your mortgage for $120,000, and the bank will then hand over a check for the difference of $30,000.
You can take...
Cash-Out Mortgage Refinancing
Refinance > Cash-Out Mortgage Refinancing
Second Mortgage/Home Equity vs. Refinance
Second Mortgage/Home Equity vs. Refinance
by: Benjamin Ehinger
Why should you take out a second mortgage or a home equity line of credit instead of refinancing?
Well,???You Shouldn?t!!
Why Not?
1. Second Mortgages usually have an interest rant that is twice or even three times as high as your first mortgage rate.
You can refinance instead and keep a very low rate.
In the long run a second mortgage will just cost you money in interest charges.
2. Home equity lines of credit are designed for mortgage account executives (salespeople) to sell you on using it like a credit card attached to your home.
They will try to convince you to use it over and over again.
3. A refinance loan is better for the equity in your home.
Very few companies will refinance your home at 100% of it?s value without forcing you to take out a second mortgage.
You don?t want to use 100% of your equity because...
Refinance > Second Mortgage/Home Equity vs. Refinance
Refinance
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