Mortgage Refinance FAQ

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Mortgage refinancing is something very popular throughout the USA but that does not mean everyone knows how it works and how they can make it work for them. Check out these frequently asked questions below and find the answers you have been looking for in regards to refinancing.

  • Is it cheaper to refinance with the same mortgage company? This question has two different answers, first yes it would be easier to refinance with the same mortgage company. It would be far more convenient and they already know your financial history, however this does not often happen. The reason for this is because there are three different sections to the mortgage industry: mortgage orientation, mortgage services and mortgage lending. If the firm you originated your mortgage from did not obtain the servicing than you are not a current customer. Speak with your mortgage servicing company and see what type of savings they offer to clients who wish to refinance with them.
  • Should I refinance to pay off an auto loan? There are many different types of situations when it comes to your financial security and if refinancing is the right option for you. Refinancing can be a great option to help you restructure your current debt from your home or your vehicle, but there are a few factors you will want to consider first. You will want to make sure that you have enough equity on your home mortgage that taking out another $27,000 will not harm your current mortgage. You will then want to make sure that the after-tax rate on the mortgage loan is lower than your car interest payments and finally, you will want make sure that there isn’t a prepayment penalty on your car loan. If you can go through this list and answer yes to each question than refinancing is a great solution to your debt.


  • When should I use a cash-out refinance to complete home improvements? Refinancing can be the ultimate solution for home improvements if you have a good credit standing and your house has a high appraisal rate. You will first want to make sure that you will end up with lower interest payments monthly and a shorter mortgage term to make it worth your while. For example if you currently are paying 9% on a 15 year fixed mortgage term and can get refinancing at 5.25% and a shorter term, this is a great opportunity for any home owner!


  • What is the difference between the rate and the APR? The Annual Percentage Rate adjusts the mortgage rate to include estimated closing costs, which include points paid at closing and mortgage insurance. You will find your lender is required to give you this information but the ARP is never perfect as it is estimated and can be rounded up by quarter percent.

By reading through these most common refinancing FAQs you can now be sure you are not the only one with questions and it is time to find the answers before you jump into a refinancing situation that may not be suited to your financial needs of today or for the future.

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Filed Under Home Refinancing, Real Estate 

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