Mortgage Refinancing - The Complete Guide
Mortgage Refinancing is taking out a new loan to pay off your old mortgage. You can even combine both a primary mortgage and a second mortgage into a new loan. The new loan will have more favorable terms and conditions. You can tailor a refinancing that supports your unique financial goals.
Decision to refinance will depend on current/projected market conditions and your personal circumstances, such as:
- Interest rates have fallen or likely to rise.
- Your credit score improved so now you are eligible for lower mortgage rates.
So you need to understand when and how to refinance to save money.
1) Why bother with refinancing?
- To lower your interest rates.
- To increase/decrease the term of your mortgage.
- To convert from a floating-rate to fixed-rate mortgage.
2) When refinancing helps?
- To restart amortization process and stop building equity.
- When refinancing with the same lender avoids any prepayment penalty.
3) Am I eligible?
- Depends on many factors including your loan-to-value ratio.
4) How much will it cost?
- Expect refinancing fees of 3% to 6% of your outstanding principal.