Refinancing Loans, What Are They?
Refinancing a mortgage means taking a new loan to pay off the existing mortgage loan. Ideally, the new loan should include better terms or features that will boost your finances and make the whole process worthwhile.
In some instances, homeowners refinance to take advantage of lower market interest rates, to cash out a part of their equity, or to reduce their monthly payment over a more extended repayment period.
The method of refinancing a mortgage parallels the method of first having one. Usually, you start by shopping around and comparing interest rates and other conditions with different mortgage lenders to see which one has the best bid. Then you equate the deal to the terms of your current loan.
If your credit score has gotten better since your first loan was accepted, you might have a good chance of applying for more favorable terms.
When your refinancing loan is accepted, the new loan will pay off your current debt entirely and all at once. Until you pay it off or refinance this loan, you can continue making payments on the new loan.