While it may sound familiar, not many people know what mortgage financing is. It means is that you are paying off your old mortgage in exchange for a new one. It can also be a substitution of your existing mortgage for a new one.
The question is, why should I go for mortgage refinancing and what are the possible benefits? Below are some of the reasons why mortgage refinancing is a good option to consider.
- It can help you significantly reduce the cost of interest rates, especially when the existing mortgage is replaced with one with a lower rate.
- Getting a new mortgage can also help lower payment obligation if the term of the new mortgage is longer than the existing one.
- Getting a mortgage loan with a fixed interest rate can help in eliminating (or reducing) the risks associated with a mortgage loan that has a variable interest rate.
- Mortgage refinancing can also be a tool for liquefying the asset of your home to take care of other needs.
Getting a new mortgage loan will help in the reduction of the payment made monthly and this can be achieved either by getting a loan with a lower interest rate or one with an extended term which spreads the payment over a longer period of time.
Another reason to consider refinancing a mortgage concerns loans with adjustable interest rates that take away the possibility of getting an increased interest rate if a fixed rate mortgage loan is chosen. This means that you get a stable payment over the remainder of your mortgage.
Mortgage refinancing also allows the ability to utilize the improved credit report you will get. It is not uncommon for people to go for unfavourable loans they do not really want is due to poor credit history. A subsequent increase in the credit rating provides a platform to apply for mortgage refinancing and get a mortgage loan that is more desirable in terms of the interest rate and the term of the loan.
These are just some of the many reasons why people go for mortgage refinancing, but there are more. Contact your mortgage broker or do some additional research for more information.