Refinance Loan - A Short Guide For First Timer Home Loaners

Are you tired of having high interest rates for your home loans?

How can I lower interest rates for my previous home loan?

These questions comes into my mind before discovering this fantastic turn around method that was used by millions and millions of people specially those people who have been labeled as poor creditor. This method is what we called refinancing home loan.

Most of you might question me back "what is it?". This question is typical to first timer in home loans. Well based on wiki, refinance or refinancing loan is the term used to the replacement of an existing debt obligation with a new debt obligation bearing different terms. Its main objective of refinancing is to alter monthly payments owed on the loan either by changing its loan interest rate, or altering the term to maturity of the loan. Refinance or refinancing is also use to reduce the risk associated with an existing loan. Interest rates on adjustable-rate loans and mortgages shift up and down based on the movements of the various indices used to calculate them. By using this method, the risk of increasing interest rates drastically has been removed, thus ensuring steady rates over the period of time. This flexibility comes at a price as lenders typically charge a risk premium for fixed rate loans. So this explains some of the basic theories regarding on refinancing. Due to this definition from Wikipedia, I have formulated some advantages in it.

Advantages of Loan Refinancing 

• It helps to extend the maturity date of your previous loan. By refinancing your loan, it will extend your previous maturity date and eventually considered extinguished for all of your previous agreement.
• You can find lower interest rate when refinancing your loan. Off course, everyone will be happy with this. This will make things easier for your budget.
• If you have many existing loans, refinancing loans might be the best option for you. Instead of dealing with multiple parties, you can merge it into one loan to pay them off, and you'll only have the new loan to contend with.

After lay down all the best part of refinancing your loans, I also found some flaws with this method.

Disadvantages of Loan Refinancing 

• Sometimes paying a smaller interest rate for the new loan is not guaranteed. Because there is an accumulated percentage for the new loan, it only means that it has a probability of paying bigger interests than before.
• If you have existing loans, finding a lending institution for your new loan would be difficult. Because an existing loans leave a mark on your credit history, and most of the lending institutions will consider you as a risk in their investment due to your poor credit history.
Now that you have learned the basics of loan refinancing and found out that having a bad credit history will hinder only hinder you to avail the advantage of refinancing loan, it is wise to prevent these things and better check your overall finances.

There are lots of home loan calculators out there like Loan Refinancing Calculator [http://fiscal-wise.com.my/FiscalWiseWeb/HomeLoanCampaign/Round1-1.aspx] that might be useful for you. You can visit Home Loan Calculators for your housing loan needs.

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A Reverse Mortgage Definition Is, Simply Put, A Home Equity Conversion Mortgage

Available to persons age 62 and over, a home equity conversion mortgage, better known as a reverse mortgage, can accomplish a number of things for seniors. Particularly in these troubled times, many seniors find themselves with significant home equity, but limited income and diminishing retirement resources. Tapping into that home equity, without incurring another monthly mortgage payment, is a feature available to seniors.

It is possible to encumber a property with a reverse mortgage, which is one that does not have to be paid back until the property is sold or until the last remaining borrower passes on. There are no restrictions on how the reverse mortgage proceeds are used and the proceeds may be taken in either a lump sum, or in monthly checks to increase monthly income.

It may immediately seem as though a home equity conversion mortgage is a wonderful opportunity, and for many it is. However, there are many pros and cons which much be considered as this type of home equity conversion is really not appropriate for all people.

The most obvious benefits of a reverse mortgage are the freeing up of cash for any purpose, and/or the creation of additional monthly income if that is the primary need.

The most obvious disadvantage of a home equity conversion mortgage is the diminished value of the estate which will ultimately be left to heirs. The second obvious disadvantage is the possibility of greater need for the home equity funds at a future date. And, thirdly, these can be very expensive loans to obtain.

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Explain Refinancing a Mortgage - Refinancing is As Clear As Mud

In order to explain refinancing a mortgage I will break it down into several simple parts. What is the definition of refinancing, what's the refinance rule of thumb, when is it worth it to refinance and what are some reasons to refinance. You can get much more detailed information later.

Very simply, refinancing is getting a new loan to pay off your current loan. Why would you do this? Because you want to trade up. You refinance because you have done research and found a loan with better terms to fit you than the one you currently have. What are some of the better terms, a lower interest rate, or a stable interest rate, lower monthly payments or a better length of term.

Keep in mind when you refinance you are getting a new loan. You can explain refinancing a mortgage the same as you would a new loan. You will have to go through the same process as you did when you got your first loan. You will need to fill out an application, get together income documentation, submit to a credit check, get an appraisal on the current value of your home and more. Sometimes if you refinance through the same lender, you may not have to do everything all over.

The refinance rule of thumb that many use to determine if it's worth it to refinance is when the new interest rate will be 2% or lower than your current rate. If your current rate has an ARM (adjustable rate mortgage) then you may want to refinance even if the rate isn't 2% lower. Have a professional explain refinancing a mortgage and how all the aspects of it might affect you. Everyone has different situations and needs to consider the process based on their situation.

Besides getting a stable interest rate, people may refinance to take advantage of better terms. If your credit has improved, you may be able to get better terms on your loan which could lower your monthly payments. Make sure you consider prepayment penalties, closing costs and points.

We can explain refinancing a mortgage at Real Estate - Get In The Know. Get In The Know now about refinancing, buying and selling homes, different mortgage types and other real estate information at Real Estate - Get In The Know

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