Mortgage refinancing, in simple layman terms, refers to the process of obtaining a new secured loan to repay an existing mortgage loan on the same property. In other words, it could be considered a swap between two loans, with the end result often being net savings exceeding hundreds or even thousands of dollars every year.
While considering mortgage refinancing, market interest rates are often the most important consideration under certain circumstances. The bundle of savings could make all the difference in your financial future.
Individual circumstances often dictate whether or not mortgage refinancing is appropriate for an individual. If the overall savings are greater and the difference in interest rates is substantial, then it would be more appropriate to explore mortgage refinancing further.
Interest rate is not the only consideration. There are several others, such as lower monthly payments, a more advantageous loan term, improved repayment options, change in terms (fixed vs. variable or vice versa), debt consolidation, or even the opportunity cash out with extra cash.
The main downside to refinancing your mortgage is that you might have to pay high closing fees depending on how your lender's refinancing program is structured.
Overall, a comprehensive assessment must be made using spreadsheets and other comparison tools available online.
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