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Mortgage Refinance

Many people who have a mortgage loan often wonder how they can lower their monthly payment. The easiest way and most common method for lowering a monthly mortgage payment is by mortgage refinancing. Getting a mortgage refinance is very similar to getting a new loan with a few differences. Let's go over what a mortgage refinance is and how it can help to lower monthly mortgage payments. 

When a person gets a home loan initially, a repayment term is agreed upon.  In most cases this repayment term is for 30 years.  Over time that number goes down year by year as payments are made.   A mortgage refinance on a bad credit mortgage, or on any mortgage for that matter is a way to re-stretch out the payment term on the existing balance that you have.  This means that if you have 20 years left on your mortgage, your principle balance will be lower than what you got the initial loan amount for.  A mortgage refinance allows you to take this new principle amount and re-stretch it out to 30 years again, thus lowering the required mortgage payment that is due each month.  Of course, getting mortgage refinancing depends on all of the same factors that a regular mortgage loan requires.  These factors include credit score, income history, credit history, and much more.  By providing the information that is needed get the refinance, the qualification process can proceed. 

When refinancing a home, an appraisal is also need as the bank needs to know that the house is worth more than what you are refinancing.  If the house value has dropped, a mortgage refinance will not be possible as the new lender will be taking a loss on the remaining loan amount.  This means that a really good thing to do when considering a refinance is to get a cost market analysis from a real estate agent to get a good idea of what the current market values are proposing your house is worth.  If the numbers match up, a mortgage refinance can be a fantastic idea if you are looking to lower your monthly payments to a more manageable level. 

Mortgage refinances have become really popular as mortgage rates have been at historic lows.  By having low rates, people are able to lower the amount of interest they are paying which will make the loan cheaper in the long run for the borrowers.  If you are looking to lower a monthly payment getting a mortgage refinance may be the right thing to do. 

 

  10 Steps to Home Ownership:

Step 1: Are You Ready?

Step 2: Hire a Realtor

Step 3: Get Loan Pre-approval

Step 4: Search for Homes

Step 5: Choose a Home

Step 6: Obtain a mortgage

Step 7: Make an Offer

Step 8: Insure Your Home

Step 9: Close the Deal

Step 10: Avoid Foreclosure

 

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