Mortgage refinancing is the process of moving from home loan from one bank to another for various reasons. The key idea with refinancing mortgages is to reduce monthly payments, get a better interest rate, or change loan schemes from a flexible rate mortgage to a fixed-rate mortgage. Additionally, some people need access to cash liquidity to fund home renovation projects or to pay off other borrowings and other purchases, and will profit to obtain a cash-out refinance.
The various reasons people opt to leverage with refinancing are:
- Cash out home equity: Homeowners can extract equity from the homes for various reasons such as major home renovations, car purchase, debt consolidation, deposit for next property etc.
- Change loan duration: shorten the time period to pay lesser interest over the duration loan & own the home much quicker; or elongate the duration to decrease monthly payments.
- Lower rates: there might be much more attareactive rates available in the market as compared to the lender you are currently with. Switching your mortgage may save you thousands.
- Change loan structure: Borrowers who used a flexible rate mortgage to make initial payments more feasible could shift to a fixed-rate mortgage after they procure enough equity & attain a stable position in their career