Refinanced Mortgage

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Refinanced Mortgage

A mortgage one repays by taking out another mortgage. Refinancing a mortgage can allow one to secure a lower interest rate; for example, one can replace a mortgage at an 8.5% rate with one at 5.5%. In the case of a balloon loan, refinancing can repay the principal if one does not have sufficient funds to do so; that is, if one has made only interest payments over the life of the loan and has not saved the principal amount when the loan comes due, refinancing can prevent bankruptcy. There are two main drawbacks to refinancing. First, there is no certainty that one will be approved for it. One thus takes a risk every time one decides to make only interest payments on a mortgage. Secondly, refinancing generally resets the repayment period; that is, if one refinances six years into a 10 year mortgage, then one generally repays the new mortgage over 10 years instead of the remaining four.
References in periodicals archive ?
Michael DeVito, executive vice president for default mortgage servicing at Wells Fargo Home Mortgage, noted that the roughly 13,000 completed mortgage modifications and 26,000 refinanced mortgages included in the latest report for the period covering March 2012 through March 2013 represent only a small portion of the total foreclosure-prevention actions and refinance activity done in that period.
In 2009 Senate Minority Leader Mitch McConnell proposed providing government backing for bank-issued new or refinanced mortgages at low interest rates.
About 70 percent of the values were refinanced mortgages, the bank said.
Lending criteria tightened while lower interest rates increased the demand for new mortgages and refinanced mortgages.
In that time period the ratio of refinanced mortgages to mortgages for home purchases has changed to 60/40.
The program is designed to enable up to 9 million borrowers to stay in their homes through refinanced mortgages.
He also suggested that homeowners who had refinanced mortgages as fixed interest rates have decreased should refinance again to adjustable rate mortgages.
Many homeowners refinanced mortgages, freeing billions of dollars for consumer spending that otherwise would have gone into their house payments.
Also, as long-term interest rates have declined, both businesses and households have refinanced mortgages and other loans.
Fremont Bank, a leading full-service community bank in Northern California, proudly financed more than $4 billion in both purchase and refinanced mortgages to over 17,500 qualified applicants in 2009, exponentially surpassing its 2008 funding volume totaling $1.
The company said that the cuts were prompted by a drop in refinanced mortgages.
In that time period the ratio of refinanced mortgages to mortgages for home purchases has changed to 60-to-40--evidence that the activity level of home buying as a percentage of mortgage borrowing is increasing.