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What's a refinance and what are the pros and cons of refinancing?

 
ProudMammaMia

Asked by ProudMammaMia at 8:50 PM on Jul. 1, 2010 in Money & Work

Level 17 (3,619 Credits)
This question is closed.
Answers (4)
  • Usually when people talk about refinancing it's for their mortgage. People usually refinance when interest rates are lower. So right now interest rates are about 4.5% depending on your credit score etc. So if you could knock your interest rate down it could save you thousands of dollars over the life of your loan. Like say right now you're paying 8% on a $100,000 mortgage. That means that you're paying about $8000 a year in interest. But if you could knock it down to 4.5% then you'd pay $4500 towards interest. *That was rough math*

    Pros: Lower payments and/or interest
    You can pull the equity out of your home and use it for other things. Though I wouldn't recommend it.
    Better terms and conditions. Maybe you go from an adjustable rate mortgage to a fixed rate mortgage. Or a 30 year mortgage to a 15.

    Cons:
    It cost money to refinance. Closing costs, appraisal cost etc.

    Hope that helps :)
    Erica_Smerica

    Answer by Erica_Smerica at 9:03 PM on Jul. 1, 2010

  • for a house?
    princessbeth79

    Answer by princessbeth79 at 8:53 PM on Jul. 1, 2010

  • For a house, from what I've learned from my parents is they look at the house, and look around, figure out how much the house is worth and sometimes helps lower ur mortage payments
    kittenripmaygo

    Answer by kittenripmaygo at 8:57 PM on Jul. 1, 2010

  • When we refinanced our house it was to go from an adjustable rate mortgage to a fixed rate. When the economy started going hay wire our rate went up like crazy. Luckily we were able to lock in at a rate that we are able to afford. No one came out to look at it. We had to send in some paper work and then sign the documents from the mortgage company. People refinance for various reasons though.
    Codysmom2106

    Answer by Codysmom2106 at 9:02 PM on Jul. 1, 2010

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