Refinancing (Mortgage)

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A mortgage refinancing is when you already have a mortgage, but because interest rates on new mortgages have fallen since you took out your original mortgage, it might make financial sense to arrange a refinancing. You do this by canceling the old mortgage and starting a new mortgage but at a lower interest rate, which translates into lower monthly repayments. If your existing lender will not refinance your mortgage or will only offer slightly better terms, you can attempt to refinance elsewhere with a new lender. If you do refinance with a new lender, the new lender will give you money to pay off the old mortgage and then set you up as a customer going forward at the lower interest rate. The new lender may charge points on the new loan, so before refinancing you should make sure you know all the additional charges you will be facing, such as title insurance. Refinancing usually makes sense if interest rates have fallen significantly from the time you took out the original loan. It helps if you are planning to stay in your house or condominium for at least a few more years, which means the cost of any points is eventually outweighed by the longterm savings from the lower monthly payments. See also Cash-out Mortgage Refinancing.