Should You Refinance Your Loan

Should You Refinance Your Loan

Among those that top ones list of goals once he starts a career is buying his own house.  For many, owning that piece of lot and having his dream house built is a sure sign of a successful career and financial stability.  However, there are some who eventually find themselves unable to pay mortgages.  Many of them resort to refinancing through Atlanta home loans and other reliable lending institutions.  But what exactly is refinancing?

Refinancing essentially is paying off a current loan with the proceeds from a new loan using the same collateral.   Those who are in danger of defaulting could consider refinancing with a lower monthly payment by extending their loan term.   Others “top-up” their current loan when they need extra cash for other expenses or even for new investments.  This type of refinancing allows them to re-borrow the paid value of their home loan giving them extra cash to pay for tuition fees, credit card debts, house improvements, or make another investment.  Their existing home loan is either extended or given an increase in monthly amortization.
Even those who are financially sound can take advantage of refinancing when the prevailing interest rates are low.  They can obtain a new loan at the lower interest rate to pay off their existing loan.  Since the interest rates are lower, either monthly payments are reduced or loan term is shortened.  This way, home owners end up paying much less throughout the duration of the loan.
Whichever the case, one must be prudent in deciding whether to refinance or not.  Refinancing comes at a cost so one must make sure that the potential savings are much higher than the cost of refinancing.  Use an online refinancing calculator or consult a trusted loan officer to know if refinancing would work to your advantage or not. Do remember that the goal in refinancing should be to reduce debt and to build equity.

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