Refinancing a Home Loan – Frequently Asked Questions
You’ve heard about refinancing your home loan, but what does that mean? How can you refinance a home loan? What are the benefits of refinancing your mortgage? If you’re eager to learn more about “How to refinance a home loan,” this article will answer all those questions.
Here are some of the most common questions that people usually ask regarding refinancing home loans –
FAQ #1 – Does refinancing restart the loan term?
No, refinancing does not restart the repayment term of your loan. It just replaces your existing mortgage with a new one. The term of your new loan will be identical to that on your existing home loan unless you decide to change it during the process.
However, some people choose to lengthen their loans as part of their refinancing process because this allows them more time to pay off their debt before they start paying the interest again (as opposed to shortening it).
This can make sense if you want more flexibility in how much money you pay each month. Still, it also increases how much interest gets added onto what’s already owed over time and therefore increases overall costs involved with refinancing.
FAQ #2 – Should you consider refinancing your home loan?
This is a crucial question to consider as it will help you determine whether or not refinancing your home loan is the right decision for you and your family. The answer depends on several factors.
- First, are you happy with your current lender, or are they charging too much interest?
- Second, do you have another lender offering better terms and conditions?
- Thirdly, what would be the cost in fees associated with refinancing (if any)?
These are all things that must be considered before deciding whether or not this is something that’s right for you.
You should also consider that refinancing might not always suit your case. For example, if you have a mortgage with a low-interest rate and there is no prepayment penalty associated with it, then refinancing may not make sense for you.
FAQ #3 – Can you refinance a home loan with the same bank?
Yes, you can refinance your home loan with the same bank. However, it’s worth considering that you may be able to get a better deal with another lender. Some institutions offer better rates than others, so it can be worth comparing them before choosing a lender.
When inquiring about refinancing and what fees are involved, ask about any new features or benefits of their new product, for example –
- Whether there are no exit fees or break costs attached to your current loan.
- Is there an option to increase your repayment amount?
- Or would you like some extra protection in case of illness or unemployment?
If you’re after different home loan features, such as offsetting credit cards versus non-offset accounts, it may be best to shift to a new home loan altogether.
If you’re still thinking of “How to refinance a home loan,” it’s recommended to talk to a mortgage broker or expert before making any commitments. A professional can help you understand the different options and find one that works for your circumstances. Based on that, you can get in touch with a financing firm that offers the best rates on refinanced home loans.