REFINANCE

When an owner obtains a new first mortgage on his real estate, the homeowner has undergone a home refinancing. Simply put, think of home refinancing as trading in an old first mortgage for a new first mortgage.To refinance a home, the homeowner must apply for a new mortgage. During the application process, the subject home will undergo a new appraisal to determine its value, and the homeowner's credit file will be reviewed. The lender will also order a title report on the property to search for any other liens that may appear. Assuming all these items meet with the lender's approval, the loan will be approved. Once approved, the homeowner will meet typically at the office of the lender or title company to sign the new mortgage. The proceeds of the new loan will be used to pay off the old first mortgage as well as any additional mortgages and liens on the property.personal loans,equity loans,home loan,car loan,equity loan,home equity loans,student loan,auto loans,bank loan,business loan,cash loan, Accordingly, the only mortgage showing on the home after the refinance will be the new loan itself. Homeowners frequently seek to refinance their home when interest rates fall below the rate they had on their mortgage when they first bought their home. For instance, if a homeowner had a 30year mortgage at 8% and a loan of $100,000.00, it would be wise to seek a refinance if the interest rates fell to 6%. The savings in such a situation would be $134.00 per month. Over the life of the loan, the savings could reach a total of $48,240.00. If the loan was for $200,000.00, the monthly savings would be $268.00, an almost $100,000.00 savings over the life of the loan. Accordingly, when determining if it is worthwhile to refinance a home, the homeowner should weigh the long term savings against the costs involved in the refinance and the length of time the homeowner intends to stay at the home to insure that the refinance is worthwhile.Costs typically involved in a refinance include: points, document preparation fees, tax service fees, title expenses, appraisal fees, and other lender's costs. Of these, the "points" are typically the most expensive. Using the $100,000 loan example again, for a refinanced loan with one point (1%), the homeowner would pay a fee of $1,000.00 to secure the loan. If two points (2%) are being paid, then the homeowner would pay $2,000. A refinance constitutes obtaining financing through a new mortgage loan for the purpose of paying off an existing mortgage loan. Though there are numerous ways to proceed with a refinance , there are two basic types, and the reasons for refinance nancing depend on individual financial situations.A straight refinance is the most common refinance nancing situation. A straight refinance means a borrower is only refinance nancing the exact amount he or she owes on an existing mortgage. Often, people do this to change either the terms of their mortgage loan or their interest rate. A refinance that carries a lower interest rate than a homeowner’s current interest rate saves the homeowner money over the course of the loan, and sometimes lowers his or her monthly payment. People sometimes proceed with a refinance to extend the terms of their loan, which can also lower monthly payments, but this is a situation that should be avoided when possible, unless the interest rate can simultaneously be reduced. A cashout refinance is another common refinance nance. A cashout refinance means borrowing more than the amount one's home is currently worth, up to an allowed maximum. The cashout refinance differs from a straight refinance in that the homeowner is not just borrowing the amount he or she owes on a current mortgage, but also borrowing against the equity in the home. People might use a cashout refinance to pay for college, make home improvements, or consolidate debt. The last option is not usually recommended, and should be pursued with caution and under the advisement of a financial planner or councilor. The conditions for approval of a refinance are slightly different than for a purchase loan. Most lenders will not allow a homeowner to refinance nance 100% of the home’s value. Offers from lenders that allow refinance nancing based on 100% or more of the home’s value should be examined closely, and one should never borrow more than the home’s actual market value. A refinance , either cashout or straight, should benefit the borrower by lowering his or her mortgage interest or providing access to equity at a lower interest rate than a conventional loan. A qualified lender will discuss your situation with you and present you with options that are financially in your favor. If the lender only seems interested in closing the loan, look for a different lender.