home lenders refinance mortgage

Question by MISTY S: what does it mean to refinance a mortgage?
Say if you’ve paid on the mortgage for 8 years & refinance, does the lend start over from the beginning? I don’t understand how it works

Best answer:

Answer by A
When you refinance a loan you are essentially getting a new loan for an amount that pays the old one off and that gives you new terms. This can be a very good thing if you originally had a high rate lend and now qualify for a much lower one, or if you have an adjustable rate loan or a balloon payment approaching up. The new loan does start from it’s beginning, but for the newer amount, which should be lower now that 8 years have gone by.For many this means a new 30 year loan, lower amount and lower range which will give them a significantly lower payment. In this day and age many people are finding that they need to stretch their income further and this helps free up cash each month.For others, it is a way of redemptive on their overall engross payments. They want the new rate, which will lower their payment, but if they keep paying what they were before they can pay off their home much sooner. Some people refi and only get a 15 year loan instead of a new 30 years. it all depends on what your needs are and what your lender offers.Keep in mind that there are usually fees involved with a refi, sometimes they can be rolled into the lend (if you need $ 100,000 to pay off the old loan and the fee is $ 2,000 your new loan can be $ 102,000). Also, at the beginning of any lending, you are paying a lot more of the interest than you are the principle on the loan. Look at amortization schedules for the remainder of your load as it is now and the entirety of the new loan. Compare what you’d be spending in interest and your payments. If you need the cash each month it may be worth the refi even if you won’t save money overall, if you’re past a certain point it won’t save you any money over the course of the lend, and will take you longer to be paid off.Example: My loan is at 7.25%, it was a well rate 13 years ago when I got it. But I’ve paid most of that interest over the course of the 13 years… I just don’t owe that practically of it anymore. I still own most of the original amount. That’s just the nature of a mortgage. Most of my payments from this clock on will go more to the principle balance. If I refi for a new 30 year lend, I will pay tons less each month, so if I needed more cash flow for other bill or to make up for a lost job or something, that would be a good thing, but I wouldn’t pay it off for another 30 years. I donning’t though. Refinancing for the sake of a better place wouldn’t save me anything at this point as far as the loan terms go. I could refi and make the same payment I do now and save some money overall and pay off a bit earlier, but then you have to think about the fees… In my case, the loan wasn’t very large to begin with and the fees involved would eat up any salvage I’d see. So for me, it’s not worth the bother.You are at 8 years, you may still have some benefit from a refi, and certainly with today’s rat you may glimpse significant savings. Watch out for the fees and compare the remaining amortization of your loan and the full ane for the new loan… there are sites where you a put in your numbers and pull it up yourself, or you can certainly have your lender provide you one (there may be a fee). Be educated and read the fine print. Some lenders may be pushing new loans with today’s rates as a way of getting new contract that may include things that weren’t in your old one.

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