What Is Refinancing? | Financial Terms

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Refinancing simply means you are taking you existing mortgage, and you are replacing it or paying it off with a new mortgage. That's all. I know it sounds complicated but it really isn't. And there are a couple of different reasons why someone might want to refinance their mortgage. One of the biggest reasons is to get a lower interest rate. So maybe I got my mortgage for my house or my apartment a few year ago. And interest rates at that time were at six or seven percent. And now I'm looking at rates that are at five percent. I might refinance or replace my old mortgage with a new mortgage to get a lower rate. And to save on interest. So saving on interest is one of the biggest reasons to refinance your mortgage. There are other reasons why you want to refinance. Sometimes you have some equity in the property and in addition to getting a new mortgage you want to pull some of that equity out of the property. And that would be considered a "cash out refinance". One of the most common questions I get is 'when should I refinance' and 'how do I know when is the right time to refinance'. And it really depends on your situation, because there are some drawbacks to refinancing as well. It is not a free benefit. When you refinance you have to pay closing cost to do that, so you always have to weigh the benefits of refinancing with the cost that you are paying. And I know a lot of people will tell you: 'there is no closing cost out there, don't worry about it', particularly the sales people that are trying to sell you a mortgage. But trust me, there are always closing costs. You may not always see it, but you may be paying out of pocket, you maybe getting a bigger loan amount, so they are putting the cost into the loan, or you may be paying in terms of a higher interest rate than you could have gotten otherwise. So you are always wanting to weigh the cost of refinancing with the perceived benefit. Also take a look to how this fits in into your financial situation. One of the challenges sometimes people don't realize is they keep stretching out or refinancing into new loans and they're stretching out the loans, and they end up paying more interest over the long term because they are never paying down or paying off their house. So keep that in mind. Make sure when refinancing you get a new mortgage that is right for your situation. And make sure the benefits outweigh the drawbacks.

[@Zen-rl5pv]

Straight, informative, and to the point. Thank you!

[@danny4982]

Very informative and to the point like someone else said. 🙌🙌🙌

[@honggwan.]

Thank you for the information. It was simple and straightforward to understand.

[@dyaneespinosa8014]

Me and my husband are new home buyers and we get letter with all these terms. Thanks for the clarification!

[@atfpv]

My dude you need a smaller shirt.

[@oscott228]

So you are saying he should "refinance" his shirt? lol

[@vicsosa5703]

Lmfaoo

[@shreddercheez9422]

Smaller shirt? Bruh look at them eyes wtf

[@MaluluKeleGuiSila]

@@shreddercheez9422 lol be nice

[@beast4548]

You probably couldn't afford his shirt.

Yes Refinancing can solve lots of problems!

[@NicolitaCG]

Great explanation. Thank you.

[@ProfessionalTycoons]

thanks for this!

[@vileslay1907]

Thank for getting straight into it u get a like❤

[@shimshifixler5767]

Great explanation
Bro needs a new shirt

[@neihc1589]

Thanks!

[@_blacksunflowers_1384]

Is there a fee to getting a new mortgage?

[@sabertoothwallaby2937]

I don't understand why a bank would allow one to refinance.

[@bobbyjonas2323]

They shouldn’t. It doesn’t make sense for them business wise

[@arthur38379]

If cash out refinance is pulling out equities how do people make money doing it, specifically if you fix up a house and get a cash out refinance how are you making money if you are just withdrawing money you’ve been paying down for the mortgage

[@______brazil]

The Lower interest stretches the buying power of the withdrawal. I’m guessing. Or you can use the withdrawal for other purposes while paying a lower amount on the principal. I’m not a financial advisor I’m just guessing

[@Mrfoggy101]

Thanks

[@GUDDAisHere]

You said, "sometimes you have equity in the property" an example of this would be a $20,000 dollar down payment?

[@mariafitts]

Down payment is not equity , equity is over time increase in home value

[@mauryak3943]

Brooklyn

[@chalolopez3389]

Can someone help me out?
I got a personal loan in March amount financed $1600 with an APR of 159.36% I make weekly payments of $70 on time every Friday. I still owe $986.
I was wondering if I should refinance or keep making payments on time until December? What would be best for me & my credit?

[@mariafitts]

My 30 year contract clearly reads I can’t refinance

[@jaysant6958]

I don't understand the part where you said by continuing to refinance, it'll stretch out the time to pay off the mortgage completely. How if you're continually making payments on the property?

[@AppleCrackedTV]

From my understanding, if you keep getting a new loan for lower interest rates it's going to take you longer to pay off the loan because you're not sticking with the original agreement. So you're basically giving the bank more of your time and money over the course of every new loan.

[@jaysant6958]

[avant-garde]. Thanks for explaining.

[@JeffreyOsb]

Let's say you have a 30 year mortgage, you're 5 years into it but your credit has improved and thus are offered a lower rate. The new mortgage can be a 30 year, 15 year, etc. It's entirely possible to just restart the 30 years HOWEVER, since you've already paid down your original mortgage some, the new mortgage will be a smaller amount and as such you'll have lower monthly payments for those 30 years.

[@jaysant6958]

Jeffrey Osborn Wow that sounds great! I'm assuming everyone does this then right? Cuz I don't see why anyone wouldn't!

[@JeffreyOsb]

Sometimes people don't want to take on a longer loan period than they already have, sometimes peoples credit scores go down due to a missed payment at some point or other debts. If the fed bank in the USA raises rates, as they're doing now, loans will overall go up even if your credit score hasn't changed due to the extra .5% or 1% that's being added.

[@kevchambers8537]

Good explanation about refinancing can be found here: monthlybudgettemplate.org/reverse-mortgage/

[@dreamsoftruth7729]

Love the info But the Shirt man What’s up with that

[@NunaDeez]

The Fvck is up with them shoulders?

[@SamEttleman]

FIRST!!

[@Fidellio369]

Where does this man's neck start?

[@beast4548]

Why you looking at his neck

[@elesfann7182]

People are so dam rude ..why r u even here

[@henryjx5294]

@@elesfann7182 nah chill that was funny lmao

[@erickim3710]

We are talking about refinancing and you’re thinking about his neck ?..

[@SamEttleman]

FIRST

[@perzonne6302]

coke eyes

[@mouinemhb4960]

6 or 7% tf

[@tonyh1345]

Different times lol

[@snape57]

@@tonyh1345current time 😐

[@M.r..R.i.c.e.]

This 2 minute video took 3 seconds to explain

[@naradaboney2946]

In other words refinancing means just what it sounds like RE longer years to pay off your debt no thanks

[@Priyank_sharma_truth_wins]

He just kok roach his google privacy and her newton mom. 👈👈👈👈👈👈🤫🇻🇳🏴‍☠️♾️