Mortgage Refinance is when you already own a home and either have a
mortgage on it or own it free and clear and then you want to borrow
money from a new lender and allow your home and real estate to be
secured to make sure the lender gets their money back.
Your home or real estate will be the collateral for the mortgage loan
and if you pay it back you will own your home free and clear. If for
some reason you cannot pay the mortgage loan back when you refinance
your real estate, you could end up loosing your home in foreclosure.
When it comes to mortgage refinancing there are many lenders and
mortgage brokers that would like to have your business. These companies
and brokers all make money when they can deliver a good, clean and
quality mortgage refinance package.
This is because they may make a point or fees on originated the loan or
even get a slice of the interest spread. There are many hands in the
deal when you are looking to find a mortgage refinance lender and
Some of the biggest banks in the country are also the largest mortgage
refinance lenders. These banks have mortgage departments and most of
their loans will be conventional which means they can package these
loans up and then sell them to Fannie Mae or Freddie Mac and then the
banks keep the servicing on the loans and make servicing fees as well.
When loans work, a lot of people make money. When loans do not work,
well usually only the lawyers and attorneys make money. We all want to
believe that when we apply for a mortgage refinance loan that we will
make all the payments and pay the loan in full. Unfortunately, sometimes
we loose a job, or have medical bills or some other unexpected drama in
our lives and we cannot pay.
With the economy soft and the housing market even softer, the mortgage
refinance rates have really come down. A year and a half ago we
purchased a new home and financed it with a 6.125% interest rate loan.
As time went by and the economy got weaker, we were able to get a
mortgage refinance loan and rate that was in the 4.85%. Sweet.
What does a mortgage refinance allow you to do? In most cases, the
lender does not want you taking out large amounts of cash, although they
do allow a certain percent to be drawn out by the borrower. The mortgage
refinance funds will be used to pay off the current first mortgage lien
holder and then if there is money left, to pay for closing fees and
Refinancing a home loan is not cheap and you will find that unless you
can get a mortgage rate that is at least one or two points better than
what you have, the economics do not make sense and you could loose
If you have an adjustable mortgage, then it may be worthwhile to check
on a mortgage refinance just so you can lock in a new twenty or thirty
year mortgage that will protect you against interest rates going up.
There are many different types of mortgage refinance options so you may
want to use the mortgage calculator discussed in another part of this
site. The refinance mortgage tools can help you figure out which
mortgage loan is right for you. Make sure your payments are affordable
and if you will save money by doing a mortgage refinance.