Welcome to Refinancing Guide
Refinance Interest Rate Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Refinancing
from:Most of us find ourselves taking out a loan at one time or another in our lives, whether it's for a home, a car or personal reasons. At the time we take out the loan, it's usually set for some many months with monthly payments due on a certain day. The amount of the monthly payments is based on the current interest rate we're charged on the principal balance we borrow. Often, during the term of the loan, we find ourselves refinancing the loan for one reason or another. The main reason why people do refinancing is usually for a better interest rate, specifically if the loan is a home mortgage. With a home mortgage loan, refinancing for a lower interest rate can make a substantial difference in the total balance of our loan.
Lower interest rates are the most common reason for refinancing mortgage loans, but they are not the only reason for refinancing. When banks lend money for the purchase of a home, they will usually only borrow up to 80% of the value of the home (known as equity). For instance, if a home is valued at $100,000, the maximum amount the bank will borrow is $80,000. As time passes, the balance of the loan decreases while the equity of the home increases. Often home owners need extra cash for remodeling or other personal reasons so they choose refinancing by using the equity of their home as collateral.
An example of this method of refinancing would be that same $100,000 home. After a couple of years, the loan balance may be down to $70,000 while the value of the home may have increased to $120,000. In this scenario, the bank will borrow up to 80% of the home's value, which would be $96,000. This amount is $26,000 more than the borrower owes on his mortgage so they are eligible for $26,000 cash out. Refinancing of home mortgage loans is very popular for this reason.
While home mortgage loans are the loans that are most often refinanced, refinancing is not limited to just mortgages. Many borrowers take out loans when they purchase a car. A lot of people like trading their cars off in a couple of years to get a newer model. Many times the first car loan is not paid off, so they do refinancing of their first car loan and add it to the new car loan. Another reason is for additional cash for personal reasons. As long as the collateral of the loan (car, etc.) is worth more than the balance of the loan, banks are more than happy to help with refinancing, if the payments have been made on time, of course.
Refinance Interest Rate News
Fed will buy $500 billion in securitized home loans - IndiaPost.com
 CBC.ca | Fed will buy $500 billion in securitized home loans IndiaPost.com, CA - The yield is equivalent to an interest rate. Now assume that the government stepped in and offered to give the borrower a better deal: $102 now in exchange ... Ben Bernanke: Fresh Attack on Mortgage Rates Is the Fed Taking a Step Toward Explicit Quantitative Easing? Fixing the Monetary Unfixable |
Long Bond Returns Most Since 1995 Amid ‘Bubble’ Talk (Update2) - Bloomberg
Long Bond Returns Most Since 1995 Amid ‘Bubble’ Talk (Update2) Bloomberg - With yields on 30-year current coupon securities dipping below 4.90 percent, mortgages with a 5.5 percent interest rate are now able to be refinanced, ... TREASURIES-Bonds rally on weak economy, Fed fixed-income buys Treasury Yields Drop to Record Lows as Bernanke Cites Buybacks |
Interest rate drop opens door to refinancing - Austin American-Statesman
Interest rate drop opens door to refinancing Austin American-Statesman, TX - By Shonda Novak, MS Taboada The recent sharp drop in mortgage interest rates is creating a window for homeowners nationwide to refinance and providing an ... |
Arlington finally sells new stadium bonds - Fort Worth Star Telegram
Arlington finally sells new stadium bonds Fort Worth Star Telegram, TX - The remaining $60 million that was not refinanced remains on a synthetic fixed interest rate and the city may try to refinance those at a fixed rate next ... |
How To Cope With The Flood Of Foreclosures? - Forbes
How To Cope With The Flood Of Foreclosures? Forbes, NY - The move immediately drove the interest rate on 30-year fixed-rate mortgages down to about 5.5% from 6%, and there were reports of a flurry of loan ... |