What does refinancing a mortgage mean?

Question by hendrixfanhawaii: What does refinancing a mortgage mean?

Best answer:

Answer by Woody
It simply means getting a new mortgage loan at a lower interest rate to save money on your payments. Your lender has to go thru all the paperwork just as if you were buying a home – credit report, title search, appraisal, etc, etc. The lender charges you for all that stuff, but it pays itself back.

One rule of thumb that I have read is that to refinance if you can reduce your interest rate by one whole point (say, from 6% to 5%)

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One Response to What does refinancing a mortgage mean?

  1. surferseb69 says:

    Hi,

    It basically mean renegotiating the terms of the mortgage.

    You take a mortgage out for a certain amount or money, a certain interest rate and certain length of time to repay it. Refinancing means changing these 3 items.

    Recently refinancing has been done by many people in order to borrow more money which was possible because your house was worth more. Unfortunately this sort of refinancing has got many people into alot of difficulty paying it back!

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