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Mortgage Refinancing
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Mortgage Refinancing refers to applying for a
secured loan intended to replace an existing
loan secured by the same assets. The most
common consumer refinancing is for a home
mortgage.
Mortgage Refinancing may be undertaken to
reduce interest costs (by refinancing at a
lower rate), to pay off other debts, to
reduce one's periodic payment obligations
(sometimes by taking a longer-term loan), to
reduce risk (such as by refinancing from a
variable-rate to a fixed-rate loan), and/or
to liquidate some or all of the equity that
has accumulated in real property during the
tenure of ownership.
It is advisable to
speak with a financial professional,
familiar with your existing home loan,
before deciding to refinance your
mortgage. Certain
types of loans contain penalty clauses that
are triggered by an early payment of the
loan, either in its entirety or a specified
portion. Also, some refinanced mortgage loans, while
having lower initial payments, may result in
larger total interest costs over the life of
the loan, or expose the borrower to greater
risks than the existing loan. Calculating
the up-front, ongoing, and potentially
variable costs of refinancing your mortgage is an
important part of the decision on whether or
not to refinance. |
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