A mortgage refinance replaces your home loan with a new one. people refinance to save money, tap the home’s equity or trade an ARM for a fixed-rate loan.
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A common way for divorcing spouses to accomplish a buy-out is to refinance the home (making sure the new loan is in buying spouse’s name alone), and take out enough cash from the home equity to pay the non-buying spouse his or her share. Once that’s done, the home must also be transferred into the buying spouse’s name alone.
When (and when not) to refinance your mortgage. There are many reasons why homeowners refinance: the opportunity to obtain a lower interest rate; the chance to shorten the term of their mortgage; the desire to convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice versa; the opportunity to tap a home’s equity in order.
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Home equity is the dollar-value difference between the balance you owe on your mortgage and the value of your property. When you refinance for an amount greater than what you owe on your home, you can receive the difference in a cash payment (this is called a cash-out refinancing).
Try our easy-to-use refinance calculator and see if you could save by refinancing. Estimate your new monthly mortgage payment, savings and breakeven point.
For example, refinancing your home loan means you still could lose the home in foreclosure if you don’t make payments. Likewise, your car can be repossessed with most auto loans. Unless you refinance into a personal unsecured loan, the collateral is at risk. In some cases, you actually can increase the risk to your collateral when you refinance.
Consider cash-out refinancing to consolidate debt or fund a home improvement project. If you have significant equity in your home, cash-out refinancing enables you to consolidate debt, such as credit cards, auto loans or student loans, with the benefit of a lower interest rate.
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· 7 Steps to Refinancing Your Home Mortgage. A newly refinanced mortgage can provide a good cushion for a household budget. Consider a 30-year-fixed-rate mortgage that originated in 2010, with an original loan amount of $250,000, at an interest rate of 5.0%. By refinancing into a new home loan valued at $2,000,000,