Refinanced Mortgage

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 ?
Bank of Spain data suggest that the market-wide proportion of refinanced mortgage loans as of June 2014 was 10%.
For the first time in 18 months, slightly more than half of mortgage lenders' volume in January went to refinanced mortgage loans versus purchase money loans, according to mortgage software firm Ellie Mae.
The average refinanced mortgage is cutting mortgage payments by 20 percent.
The bill would also create a plan for the Federal Housing Administration (FHA) to begin insuring up to $300 billion in refinanced mortgage loans for families struggling to avoid foreclosure.
Borrowers must also agree to participate in early delinquency intervention counseling should they become delinquent for 30 days or more on their refinanced mortgage.
She said the refinanced mortgage will mean lower, more stable monthly payments.
Making these moves will produce monthly savings of roughly $1,300 from discontinued private school; $476 from the lowered 401(k) contribution; $45 from the refinanced mortgage payment; and $226 from paying off debts with contest winnings.
Another example occurs when consolidating a five-year car loan into a 15-year refinanced mortgage or 10-year home equity loan.
An exception exists for the refinanced mortgage of a balloon loan, which will qualify as grandfathered debt for the term of the flint refinancing, up to 30 years.
If the maturity and outstanding balance of the average refinanced mortgage had not changed, the decline in the interest rate would have lowered the monthly mortgage payment for the average refinancing homeowner by $98, for an annual savings of $1,179.
For points paid on a refinanced mortgage, remaining points paid that have not yet been deducted may be deducted when the refinancing is completed and the old loan paid off.
Credit unions and other housing finance lenders face an economic pinch as rising interest rates squash demand for refinanced mortgage loans while demand for purchase money loans still struggles to grow.