Why people refinance their mortgages

Read on to know the reasons why borrowers are sometimes opting to refinance their existing mortgage.

11:23 20 May 2013

Due to unstable economic conditions, more and more people are looking for ways to lessen the amount of bills that they pay every month. One of their options is refinancing their mortgage. Through this, they can have lighter repayment schemes.

Aside from decreasing monthly repayments, some people also refinance their mortgage to get additional fund that they use for other purposes like starting a business or pursuing higher education. With this option, additional amounts can be borrowed on top of the existing unpaid loan.

Another common reason is debt consolidation. A lot of people these days owe different companies money. In order to simplify the whole process of paying each one of their lenders and to take advantage of lower interest rate, they opt to refinance their mortgage.

Keep in mind that if you’re considering this option, you must know that refinancing your home is basically the same process when you’re applying for new loan. The lender will take your credit score and capacity to pay into consideration before they approve or reject your application.