All refinancing a home loan does is replace an existing home loan with a new one that meets the homeowners financial needs or wants. While there are many reasons that homeowners look to get a mortgage refinance, the basics behind them are all the same. Here is what it means to refinance a mortgage.

Many homeowners look to get a home loan refinance for a specific reason. Whether it is to get better interest rates, get cash back from their homes equity, or to renegotiate the length of the loan, there are a lot of reasons to refinance. In any refinancing situation, the basic premise is the same. A homeowner is getting a new home loan, hopefully with terms and conditions that meet their financial desires, that allows them to replace their existing loan. Refinancing options exist because homeowners often use their home as a line of credit, and often still owe money on their loan.

When a homeowner refinances a mortgage when interest rates are low, they may be able to benefit from that and see a reduction in the amount the payment is every month. Some homeowners have seen their homes value drop. Refinancing into a new mortgage can adjust the homes value, and save the homeowner thousands of dollars over the loans length. Even if a homeowner has a need for a large amount of cash there are refinancing options for that too. When it all comes down to it though, refinancing a mortgage is just replacing one loan with another. Homeowners should not be intimidated by the process, it should be a little easier than the initial home loan approval process.

Even the actual home loan refinancing process is exactly the same as the process a homeowner goes through when initially getting a home loan. Their may be points to pay, application and processing fees as well, just like a typical mortgage. While refinancing is a very popular option, especially now with interest rates near all time lows, it is not the answer for everyones financial situation. People should always be mindful of any expenses that may be associated with the home refinance process and add those numbers to their financial plan to see if it even makes sense. Homeowners really need to evaluate their own situations to see what, if any, mortgage refinancing options may benefit them and their financial well being. Everyone has their own goals and financial situations to deal with, there is no universal answer. Knowledge is power in this case and the more a homeowner has the better the entire mortgage refinancing process will be.

-M Petrone

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