MORTGAGE Blog & ARTICLES
Refinance: Is it the Answer to your Mortgage Problem?
Have you ever tried repaying your debt by another loan? It may sound crazy but there are people that do this. With the standard of living that people have right now, it is no longer impossible for people to pay their debt in exchange for another debt. Everyone knows that people who are practicing this said “paying tactics” as they call it are those that have experience in applying for loan. They have their own reasons for doing these things same as with those who are first timers in this kind of thing. This process is known as refinance.
What is refinance?
There are two meanings that you can associate with refinance. These are:
- Replaces the previous loan with a new one as being given with a great loan offer
- A person or business change the schedule of payment for paying the loan
These two definitions are applicable for both business and individual purposes that concerns loan. In terms of mortgage, people refinance it to pay off their existing loan, thus, replacing it with a new loan.
Here are the following reasons why people refinance:
- There is a desire to combine one’s debt.
- You are given the chance to hit home equity just to spend for a larger purchase.
- They can convert fixed-rate mortgage to adjustable-rate mortgage and vice versa.
- They have the chance to make the duration of mortgage into a shorter term.
- They will be able to have a low interest rate.
These are the reasons why people go for refinancing their debt with a new one. No wonder that there are people that are attracted with this kind of thing. Although you are given with lower interest rate or even convert your previous loan to the other type, you are still prone from risk of not able to pay it.
The Disadvantages of Refinance in Mortgage
It would really give you that great financial sense but things do not always go that way. Here are the following drawbacks of this process:
- Low appraisal – this is already inevitable to refinancing. Each and every appraiser is different. They may or may not refinance you depending on the kind of refinance that you are applying.
- High cost - if you think that you can save for less, well, refinance may even exceed on what you have expected. If you need this to finance other loans, there will be an additional cost or even double of its cost just to pay the fee.
- Applying for a new mortgage loan – you may be successful in applying for your first loan for mortgage but things are different the second time around. Lenders are already strict and cautious. If they found out that you already applied for it before, they may no longer approve your application.
Things are simple as that. If you will not be able to pay your previous loan because you don’t have the amount, you can try the option of paying it by applying for a new one. It is another loan to think of, that can caused you stress but others will do it other than not paying the loan.
Please contact Resourceful Capital Financial Corporation at 1-888-882-0786 to discuss how we can help.
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