WHY SHOULD YOU REFINANCE?
What are some of the benefits you can expect when refinancing?
How can refinancing make your life better?
Let's start with some definitions. Refinancing means replacing existing financing with new financing that creates a tangible benefit to the borrower.
There are several types of refinance transactions.
- Rate and term reduction
- Cash Out
- Someone is changing title
- Loan modification
Why do people refinance?
Rate and Term Reduction
(Borrower receives no cash at closing)
- To lower their payment.
- To shorten the payback period- reduction in term.
- To consolidate 1st and 2nd mortgages.
- To consolidate debts- lower payment/ maximize tax deduction.
- To pay off their credit cards.
- To build up equity.
- To convert to a fixed rate.
- To move from an adjustable to an adjustable.
- To avoid a payment increase when a fixed rate expires.
- To take advantage of low market interest rates.
Cash Out
(Borrower receives cash at closing)
- Invest in other properties or other investments.
- Fund a retirement plan.
- Fund college education.
- Purchase a car.
- Savings in the event of job or income loss.
- Fund Maternity leave or other leave of absence.
Changing Title
- Add or remove one or more persons/ entities from the title to the property.
- Add or remove one or more persons/ entities from the loan on the property.
Loan Modification
- Modify the terms of an existing at-risk loan due to documented loss in income to the borrower.
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