What is Mortgage Refinancing?

What is Mortgage Refinancing?
By: Joseph Then
Mortgage Refinancing is defined as the process wherein the borrower applies for a new loan usually at a lower interest rate in order to pay off an existing loan with a higher interest rate. The other common reason when a borrower opts for a mortgage refinancing is when the borrower wants to change the loan from a variable loan to a fixed loan. The lenders or the loan providing companies are attracting an ever-increasing number of customers by offering a lower interest rate. Majority of the masses prefer to avail a secured loan rather than opting for an unsecured loan as a secured loan can be availed more easily at a lower rate of interest. A major benefit to avail a mortgage refinance is that it improves the credibility of the borrower. He or she might be facing difficulty in paying of the monthly installments that keep on varying if it is a variable mortgage loan. On the other side, the ability to pay back the loan in a shorter duration of time improves the credit rating of an individual.A mortgage refinance can be availed by an individual offering his or her property as a collateral security to the lender. Property is offered as a security to protect the individual interest of the lender who can claim rights of lien over it in case the borrower fails to pay back the entire amount of the loan or goes bankrupt. However, it needs to be noted in the light of the above-mentioned benefits that before deciding whether or not to select mortgage refinancing, you must take into consideration various important factors. These are:- the penalty clauses mentioned in the terms of agreement- the degree of risk involved - the mode of mortgage refinanceFor instance, there have been reported situations wherein the borrower ends up paying an increased amount of installment over the periods of time after availing the inaugural discount. Rest assured, it can be stated that mortgage refinancing is a boon for the borrowers who are bearing unusually higher interest rates charged by the lender and face a higher risk of losing the property they have offered as a collateral.
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Joseph Then provides advices about Personal Finance and dealing with bad credits. You can visit the website www.BadCreditBin.com for more information

What Mortgage Options Are Available To A Homebuyer?

What Mortgage Options Are Available To A Homebuyer?
By: Joseph Kenny -
Buying a home is something that most people look forward to. When it comes time to look at the various options that are available for mortgages, though, the questions start to arise. There are so many different options that it can definitely be confusing. Here are some brief descriptions that explain your different loan type products.Every mortgage will fall under one of two general types - it will either be a fixed rate mortgage or an adjustable rate mortgage. Here are definitions of these two types.Fixed Rate MortgagesA fixed rate mortgage is one in which the interest and payment rate always stays the same. It does not matter what happens to the market - good or bad, your payment does not change. This is especially good when the market is changing or the economy is fluctuating.Adjustable Rate MortgagesAn adjustable rate mortgage is one that changes periodically in order to reflect the economic conditions. Most people get these mortgages because it allows them to get a little bigger house than they could otherwise afford. These usually have a fixed rate portion for a few years first, then the rate changes regularly - could be monthly or yearly. This type of mortgage is the best when the economy is good, but could be very costly in times of adverse economies.Among these two types of mortgages, there are different names that could come under either general type.Balloon MortgageThis type of fixed rate mortgage and is generally for 5 to 7 years. It does not fully amortize by the end of the term since it is usually refinanced for a 25 or 30-year mortgage. This option must be stated in the terms, though, so be sure it is in there, or you may be left without being able to refinance.Jumbo MortgageTwo of the largest loan agencies in the US - Fannie Mae and Freddie Mac, set ceilings on the amount of loans that they will give to a borrower for a home. Any mortgage requiring more than this is considered a jumbo mortgage. They may also be called a non-conforming mortgage.Assumable MortgagesAn assumable mortgage is one that the new buyer of the house simply takes over withoutany refinancing. The terms that enable this kind of transfer must be in the contract when applied for, or it cannot qualify as an assumable mortgage. It will also require the lender’s permission and the new owner must qualify before being approved. Under some conditions, some of the terms may be changed, and closing costs will be involved. Taking over an assumable mortgage cold turn out to be very good for the buyer – especially if the interest rate is better than what the market is offering at the time. Both types, fixed rate or adjustable rate, can be assumable.Interest Only MortgagesWhile the title of this mortgage is more than a little deceiving, it is not what it seems. It would be more truthful to say interest first mortgage than anything. With this type of mortgage, the interest is paid first, leaving the principal untouched until the interest is paid. Generally, this means more is paid because the principal is not paid down at all. This would normally slowly reduce your interest. The difference could result in thousands of dollars more being paid over the lifetime of the mortgage.
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Joe Kenny writes for the UK Loan Store, offering mortgage applications, visit them today for some great secured loan offers for that special purchase or even for home improvements. Visit today: www.ukpersonalloanstore.co.uk/