By | September 24, 2014

Making mortgage payments in this world of highly fluctuating interest rates and an unstable economy is a tough game. Perhaps it can be made easier by refinancing mortgage. The process of refinance mortgage is to pay off your current mortgage and get a new one in order to reduce the expenses and interest rates or to change your current mortgage company.


  • Reduce your payments: Interest rate on a mortgage depends on the monthly payment made on mortgage. Thus lower interest rates lead to lower monthly payments as well as monthly savings.

  • Increase or decrease the term of your mortgage: Increasing the term of your mortgage will reduce the amount you have to pay every month. Though this will also lead to an increase in the total amount of interest paid on mortgage. Decreasing the term of your mortgage will reduce the interest rates, but the monthly payment would be higher as the loan is being paid off sooner.

  • Change from adjustable-rate mortgage to fixed-rate mortgage. Monthly payments in adjustable-rate mortgage could increase or decrease with changes in interest rates. Refinancing also allows getting adjustable-rate mortgage with new and better terms. Fixed-rate mortgage allows you to have stability as the monthly payments and interests are fixed even if the interest rates go higher in future.

  • Get cash from equity: Equity is the difference between worth of your property and the total amount that is to be paid to your mortgage company. When the property is refinanced for more than its actual worth, Mortgage Company pays the remaining amount in cash.


  • Penalties: Most of the mortgage agreements let companies charge penalty fees from the borrower. Also there are prepayment fees you have to pay, for example, bank fees, paying for attorney, etc.

  • It is not necessary that your monthly savings would be higher than your monthly mortgage payments.

  • Refinancing might not be a good idea if you plan to move to a new house in near future.


  • Application fee: Mortgage companies charge some fee for checking your credit report and processing loan request.

  • Loan origination charges: This fee is charged by the broker for evaluation and preparation of the mortgage loan.

  • Points: This is charged by the broker at closing. There are two types of points – First kind is to be paid just once in order to lower the interest rate. Second is charged by some brokers in order to earn some money from the loan.

  • Attorney review fees: Broker charges the fees paid to the lawyer or company that conducts closing for the broker.

  • Title search and Insurance: It covers the charges of your policy that is issued by the insurance company as well as the cost of reviewing your ownership details.

Refinancing mortgage is a tough decision to make. You must get all the right refinance mortgage information and clarify your doubts before you decide to refinance.

Leave a Reply

Your email address will not be published. Required fields are marked *