If you have at one time or another bought a home, then you probably heard of the term “refinance.” But what is refinance, exactly?
Let’s go down to the basics. The term financing refers to the act of providing a certain amount of money to an individual in order to buy a home, a car, a real estate property, et cetera. Loans and mortgages are actually types of financing. Now, when we say “refinance”, therefore, it means that we are still providing a certain amount of money. The prefix “re-” actually points to the idea that you will be basically taking a new mortgage or loan to replace an old one.
Financial analysts will claim that refinance is a great option for buyers when interest rates are low. The reason for this is quite obvious. Refinance mortgages or loans allow you to take new loans for a relatively lower interest rate. Low interest rates mean low monthly repayments. And low monthly repayments mean bigger savings for you. Of course, this only works if, and only if, the rates are low. If the rates are high, refinance is not advisable.
Another advantage of refinancing your mortgage loan is that the move will allow you to change loan terms from a long one to something shorter. With a shorter loan term, you can pay off your loan amount much sooner, thus allowing you to save more on your overall interest payments.
Besides bigger savings on your monthly bills, a refinance mortgage or loan provides you greater loan satisfaction. For instance, if you find that the terms of your current loan are unsatisfactory, you can switch to another lender with a refinance loan. You can use the money you get from your refinance loan to pay off your old loan. In addition to that, refinancing gives you the option to change your lending company whose services or programs make you unhappy or unsatisfied.
Refinance is also a good way to consolidate your monthly bills. Don’t you just find it such a complete headache to receive all sorts of bills every month? Bills which are very confusing and very time-consuming to sort? You can get rid of this problem with a mortgage refinance. Getting a second loan will allow you to consolidate all your debts into one single monthly bill. Debt consolidation is especially beneficial which aside from lessening the hassle you’d have to go throughPsychology Articles, it also reduces the possibility of a bill forgotten or a debt going unpaid.