The process of paying off an existing mortgage with a new loan secured by the same property is called refinancing. This is true for refinancing a home in any area in Ohio.
Borrowers can often benefit financially from refinancing their homes in the Ohio area. And there are two basic types of refinance mortgages that those living in Ohio can choose from:
• An Ohio Reduction Refinance. This refinance mortgage process is made solely for the purpose of reducing the mortgage. With this transaction the new mortgage loan is increased to include, or what they call a “roll in,” the fees/closing costs associated with the new loan. With an Ohio Reduction Refinance, if you use Fannie Mae, you might be allowed to obtain a small amount of money from the transaction without it being considered a “cash-out” refinance. With an Ohio reduction refinance Fannie Mae will allow up to 2% of the loan balance, or $2,000, whichever is less, as the maximum cash-out.
• An Ohio cash-out refinance. This Ohio refinance mortgage transaction is made specifically to obtain money. In this transaction the new mortgage balance is increased to take care of the closing costs, pay off the existing mortgage balance, and provide the person borrowing with the money they are requesting. The person who receives the cash in the Ohio cash-out refinancing can use the money for paying off credit card debts, paying tax liens, or for any thing else they would like.
If you live in Ohio and are considering doing a refinance on your mortgage then the single most important thing you must evaluate is the new value of the property. The estimated value of the new property must be correctly evaluated against the balance of any existing liens (including the balance of the current mortgage).
This is very important because it ensures that there is sufficient equity to meet both maximum loan requirements and the borrower’s objectives.
There are several reasons a resident of Ohio would want to refinance their mortgage: To reduce the Ohio home mortgage payment, to change the Ohio home loan type, or to obtain cash-out to pay bills or other reasons.
The Ohio Rate Reduction
One of the most obvious reasons for a resident of Ohio to refinance is to reduce their interest rate. Rates have slowly risen but the last couple of years Ohio mortgage rates were at an all time low. With the Ohio mortgage rate reduction the most common way to refinance is to roll costs of the refinance transaction into the new Ohio mortgage loan.
When does it make sense to refinance with the current refinance mortgage rates Dayton Ohio? Most experts will tell you that it makes sense to use the rate reduction transaction when you are able to recoup the costs of the refinancing within 2 to 3 years.
Ohio Term Reduction
Some consider another option. This option is a reduction in the mortgage term in conjunction with rate reduction to add to the savings of an Ohio home mortgage refinance.
There are certain people who an benefit from a term reduction: Baby boomers planning on retirement at the end of the term, investors with large cash flow, people with second homes, and those interested in making larger payments in order to accumulate more equity in their Ohio homes.
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