What Is Refinancing A Mortgage?
What is refinancing a mortgage? During these tuff economic times, many people are refinancing their mortgages. During the refinancing of a mortgage an existing mortgage is paid off and a new one is created. Many people chose to combine a first and second mortgage when they do mortgage refinancing. There are some great reasons why people chose to refinance their mortgages.
Being able to get a lower interest rate in one of the main reason why people chose to refinance their mortgages. Even if the interest rate on a mortgage is only lowered by a half of a percent, their monthly mortgage can go down by a large amount. Over the term of their mortgage, homeowners can save thousands of dollars interest by having their interest rates lowered. By having their interest rate lowered homeowners will also be able to build equity in their home much more quickly.
Refinancing a mortgage is also a good way for a homeowner to adjust the length of their mortgage. Refinancing a mortgage to extend the length of a mortgage will lower the monthly payment of a mortgage, but will also increase the total amount of interest a homeowner has to pay. Refinancing a mortgage to a shorter length will obviously lower the amount of time a home owner will be paying a mortgage payment. Better interest rates are usually available to homeowners who are shorting the length of their mortgage.
Another good reason for refinancing a mortgage is so homeowners can pull some cash out of the equity they have built up in their home. If a homeowner owes less money on their home than their home is worth refinancing a mortgage to get cash can be an option for them. Many homeowners chose this option when they want to do remodeling to their homes.
Refinancing a mortgage is popular for people who want to turn their adjustable rate mortgage into a fixed rate mortgage. Many homeowners find it stressful to have an adjustable rate mortgage, because monthly mortgage payment can change. When a homeowner refinances a mortgage from an adjustable rate to a fixed rate mortgage they will have the peace of mind of knowing what their monthly mortgage payment will be.