Home Loan Refinancing FAQ
Refinancing a home loan can be quite overwhelming and even confusing especially to those unfamiliar with the industry. Below are answers to some of the most common questions to refinancing a home.
What is refinancing?
Refinancing simply means that you change your existing home loan to a new one that better suits your current circumstances.
How does refinancing benefit me?
Refinancing can allow you to have lower interest rates, reduce your monthly payments, change your loan to a fixed rate and even unlock equity in your home for a lump sum of cash.
How does refinancing work?
Funds from the new loan are used to pay for the current mortgage. The new loan generally comes from a different lender although your existing lender may be willing to provide refinancing for you as well.
How much can I borrow?
The exact amount you can borrow is dependent on your income and your ability to pay back the loan. Other factors which affect this figure include your current financial responsibilities and your credit history. Using a loan calculator will help you determine how much you can borrow.
What can I use the cash for?
If you decide to take out cash from your home, you can use it on anything you wish whether you have home renovations that need to be done or have potential investments.
What are the costs involved?
Fees need to be paid to both the current and new lender which can cost anywhere from $500 to $2,000 depending on your state or territory. These fees can include exit fees, stamp duties, valuation fees, application fees and possibly more.
Is there any reason I shouldn’t refinance?
Generally, you shouldn’t refinance your home if your income is not stable, you have plans to move out, you have a poor credit history or the costs outweigh the benefits.
Should I consolidate my debt?
If you have credit cards, student loans and car payments, then consolidating all your debt into your home loan mortgage means that you only have one payment to worry about. Some lenders actually prefer that you consolidate and can even offer better terms if you do.
Can I still refinance with a delinquent record?
This will depend on your lender and your reason for being delinquent in the first place. If your lender determines that you are able to make payments, then they may have no problems with refinancing your mortgage. The only downside is that you could be left with less than ideal terms and conditions on your loan.
Still have questions?
Get more information about any refinancing questions or concerns that you may have by calling one of our Loan Monster consults at 1800 MONSTER. We are also available by email at firstname.lastname@example.org.
Filling out enquiry form takes less than a minute and one of our consultants will be in contact with you within 24 hours.
* The information contained in this website should not be taken as constituting personal advice. We recommend that you seek professional assistance before acting upon any information provided or linked on this web site.