What Is Refinancing a Home?
Refinancing a home refers to taking out a new mortgage to pay off the old mortgage. When contemplating a refinance, you have to weigh the costs and benefits, and know how much longer you plan to own your current home.FunctionMost people refinance their homes in order to take advantage of lower interest rates. Another reason is to tap into the equity of their home for a cash-out refinance.SizeAccording to Investopedia, refinancing to lower your interest rate by 1 to 2 percent is usually sufficient to make refinancing worth the closing costs.ConsiderationsYou can refinance as often as you want. However, some mortgages may have a prepayment penalty that you would have to pay if you refinanced before the waiting period expired.Time FrameYou should consider how much longer you plan to keep your mortgage before refinancing.
