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House Refinancing-How You Can Borrow Wisely

When you are looking for house refinancing, it's important that you make choices that will improve your financial future over the long term.  Here are some factors to consider.
 
House refinancing is often used to restructure your debt obligations. Since loan rates on a mortgage refinance typically are lower than those for such loans as credit card debt, medical charges or other personal loans from commercial lenders, borrowers often try to restructure their mortgages to use equity in the home for paying down consumer debt for other projects requiring significant cash. As with any loan, it's a good idea to borrow wisely in order to protect your assets from excess costs and longer terms. Make certain you check the amount borrowed, the amount of interest you will pay and whether or not the lender is charging excessive fees for loan origination.
 
Equity
 
The size of your house refinancing loan will depend to a large extent upon the equity that is available in the subject property.  The equity is the difference between the market value or assessed value of the property and the amount of money that is still owed against the original loan.  Hopefully, the equity is positive rather than negative.  A refinancing loan on your house takes a portion of the available value of the house in cash.  The cash is then available to use for paying down debt, paying for major needs such as education or property renovation.
 
Rates
 
A major factor in the cost of your house refinancing is the rates associated with the loan.  This is the amount of interest that you can expect to pay initially and over the course of the loan. Often the interest rates at any time are tied to the prime rates, or the rate charged to the best customers. The rates are also affected by length of the loan and the ability or perceived ability to repay. Generally, the shorter the loan term, the better the rates that can be expected.  Also, the person with a better credit score can expect to pay less for the loan than the person who has a poor credit score.
 
Terms
 
Another factor that affects the size of the house refinancing loan is how long you expect to take to pay off the principal of the loan.  Since the amount of interest paid is the variable factor in the loan, it stands to reason that if you pay interest for a longer period, it will cost you more cash overall. The monthly payment during the period of the loan will be less if it is spread out over a longer period.
 
Fees
 
If you have completed a good package for house refinancing, make sure that you will not be surprised by the fees and costs associated with the loan itself. Review and question all the costs associated with your loan package.  Refuse to accept unexplained tack-ons or exhorbitent fees for your loan. In fact, lenders can be in a position of bidding for your business by reducing interest rates, or by trimming the excess fees and costs associated with your loan. Question each item in the package and make certain it reflects something that is helpful to you as the borrower.