REFINANCE
Refinancing is a term that describes retiring ("paying back") a loan and at the same time taking out a new loan for the same amount. The reason to do this is if interest rates have lowered and you are able to take a new loan out at a lower rate. There is often a fee to refinance so check carefully with your lender to make sure you understand all the fees involved. Even if there is a fee, you may find that if rates have lowered enough you may still save money on a refinance.
Top reasons to refinance:
To take advantage of lower rates.
To change into a new loan with a different maturity, usually longer, in order to have more time to pay back a loan.
If the fixed rate period of a loan is ending and you want to enter into a new loan to extend the fixed rate period.
In summary, whether it makes sense to refinance depends on your individual situation and what your financial goals are. Taking advantage of lower interest rates is the most typical reason to refinance.
If you plan to refinance you need to ask yourself some questions:
How have rates changed from when you took out your mortgage?
How long do you expect to be in your home?
Are you willing to pay points to get a lower rate?
Will having lower payments more than make up for the closing costs , fees and points if any that are associated with refinancing?
As with any mortgage or loan, you should do your research. Understand the cost involved in retiring your current loan. Search around and find the best rates on a new loan. Credit4u has many quality sponsors that will be pleased to give you a free estimate on a loan. Once you have the information you can calculate the benefit of refinancing your loan.
Refinance Sponsors