Home Loan Mortgage Refinance
Mortgage may refer to:
- Mortgage loan, a loan secured by a mortgage on real property Mortgage,
- a security interest on real property granted to a lender, as in mortgage law
- The mortgage document (deed)
Types (US loans only)
Borrowers with this type of refinancing typically pay few upfront fees to get the new mortgage loan. This type of refinance can be beneficial provided the prevailing market rate is lower than your existing rate by at least 1.5 percentage points. However, what most lenders fail to disclose is that the money you save upfront is being collected on the back through what's called yield spread premium (YSP). Yield spread premiums are the cash that a mortgage company receives for steering a borrower into a home loan with a higher interest rate. The latter will even eventually lead to borrower's overpaying. True No Closing Costs is usually not the best option. When you pay out of pocket for your closing costs then you will recognize each and every cost associated with the loan. In most cases, you will also negotiate the fees for the appraisal & escrows down to a reasonable cost. Sometimes, when wrapping closing costs into your loan, people forget about the fees because they are usually not coming into the loan with any money.
This type of refinance may not help lower the monthly payment or shorten mortgage periods. It can be used for home improvement, credit card and other debt consolidation if the borrower qualifies with their current home equity; they can refinance with a loan amount larger than their current mortgage and keep the cash difference.