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Short review:
Refinance is one of the most convenient ways to repay a loan because refinancing means to apply for another loan to pay back a
previous loan on the same mortgage. The most common mortgage is generally one's home.


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Refinance



Refinance is one of the most convenient ways to repay a loan because refinancing means to apply for another loan to pay back a
previous loan on the same mortgage. The most common mortgage is generally one's home.

Refinance advantages -

"Refinance reduces the risk of losing ones property.

"Refinance can lower the interest rates on the mortgage and thus reduce the monthly payment of interest with the principal amount.
This way the borrower can save a lot of money and utilize it in other resources. If savings increase it also helps the borrower to
pay back the loan before the closing of the loan term.

"If the original loan had an adjustable loan rate Refinance helps the borrower to change the loan rate type to fixed loan rate thus
reducing the risk on the part of the borrower. This process also lowers the interest rate because when it's fixed it remains at the
same level and does not change with the prime index rate of the market.

"Refinance also allows the borrower to utilize the equity accumulated in the house or any other real property in concern in the term
of ownership by turning the equity into cash.

Refinance loan can be opted for at any point of time and there are no special requirements for it. The procedure of taking the loan
is the same as taking any other loan in most of the banks. But still the borrower is suggested to take prior information from his
bank before applying for the loan.

Refinance loan may have a fixed rate of loan interest and an adjustable rate of loan interest. It is wise enough to select a fixed rate
of loan interest as the rate of interest remains static for the life of the loan thus reducing the monthly payments. The adjustable rate
keeps on changing and also increases the monthly payments of interest and the borrower's expenditure. The rate of interest may
vary from bank to bank and it is profitable to do a thorough research on banks to find out which bank offers the lowest rate of
interest with other facilities.

Refinance can be of two types as given below:

1.Cash out 2.No closing cost

In case of cash out refinance the monthly payments are not surely reduced but the borrower gets other advantages. The borrower
can pay off credit card debts, can utilize the money for improvement of home and for medical expenses and so on. This can only
happen if the equity in ones home qualifies for the applied amount of loan. Cash out Refinance lets you take an amount of money
in loan which is higher than your present mortgage and thus you get the left over money from the present loan. This amount is
completely the borrowers property.

No closing cost refinance is suggested only for those borrowers who can pay upfront fees i.e. paying a large part of the loan in the
beginning of the term. This reduces the rate of interest of the loan for the rest of the period. Generally the upfront fees are termed
as points. The more points you pay early the more beneficial it would be for you in future.

				
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posted:7/3/2011
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