Why Refinance?

In these hard economic times, many Americans are finding it difficult to continue paying mortgages made under happier circumstances. As a result, many responsible homeowners are considering refinancing their mortgages in order to lower their monthly payments. But as with all major financial decisions, it’s important to understand the ins and outs before committing.

What is Refinancing?

In short, refinancing is the act readjusting the terms of a mortgage agreement. Normally, this readjustment is either in the form of changing the duration of the loan or its interest rate. Either way, the goal for the borrower is to change the payment structure of the loan in order to achieve better cash flow.

Most lenders require the borrower to pay back a certain percentage of the total loan immediately in order to refinance the loan. This percentage is referred to as “points,” with each point corresponding to one percent of the loan. Therefore, two points would translate to 2% of the loan. When refinancing, it is important to understand that the cost of paying points is mitigated by the lower monthly payments that result from refinancing. It is a trade-off in which the payment of part of the loan immediately translates into lower monthly payments.

Contact Us

If you or someone close to you is considering the major step of refinancing a mortgage and would like more information about the process, contact the Maryland mortgage modification lawyers of Chaifetz & Coyle, P.C. by calling 443-546-4608.