Deciding to refinance a mortgage is a task that requires the homeowner to look at the available sources of such financing, and also to consider whether he/she has a clear goal in mind. It may be that the first mortgage on the house was an adjustable one, and a set interest rate for the life of the loan is the goal. If that is the case, finding a mortgage company that will do that isn't too difficult. One has but to look in the local telephone directory or on the Internet to find a plethora of companies that do that. What happens with refinancing is, the home owner's mortgage is paid off by the new lender, and a new loan is created with a constant interest rate (lower, it is hoped) for the life of the loan. Since the homeowner is starting over, the terms can be longer or shorter than the first one, and lower payments be set up as a result. Sometimes the lower interest rate is enough by itself to lower payments without changing the terms of the note.
People with these thoughts may have another goal in mind. If there is enough equity in the first mortgage, they may ask for additional funds over what is owed on the mortgage to pay off other bills. This allows a lower interest rate on all debts, and spreads the credit card or other unsecured indebtedness out over a longer period of time. When deciding to refinance a mortgage, the homeowner may have entered into the first loan when interest rates were higher than they are now, and simply wishes to take advantage of the new lower rate. One should profit from the deal, but remember from where all good things come. (1 Samuel 12:21) "And turn ye not aside: for then should ye go after vain things, which cannot profit nor deliver; for they are vain."
When taking this type of financing option, there are costs to consider as well. When the first mortgage was obtained, the property was surveyed, someone had to inspect it, the title had to be searched to ensure there were no prior liens on it, a title insurance policy had to be purchased, hazard insurance acquired, and certain fees like a loan application fee, the mortgagor's attorney fees, etc., and those were born by the buyer. When deciding to refinance a mortgage, the homeowner must be aware that those same costs are going to be incurred again. However, if he searches carefully he may find a mortgage company that will bear those costs. The end result should be a boon to the homeowner, and most certainly will be if he is careful about the deal he makes.
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