Financing Mortgage

1, Definition of Financing:

It refers to the replacement of an existing debt obligation with a debt obligation bearing different terms. The most common consumer refinancing is for a home mortgage.
( Wikipedia)

2, Reasons for financing mortgage:

There are two primary reasons to refinance a mortgage:

• Financing mortgage may help us to get more desirable rate and terms

• It also make to extract cash from the home's equity.

3, Types of financing mortgage:

• Rate-and-term refinancing

It pays off one loan with the proceeds from the new loan and it is using the same property as collateral. This type of mortgage loan allows you to take advantage of lower interest rates or take the shorten term of your mortgage to build equity faster.

This type of mortgage loan refers to myriad strategies. It is including switching from an ARM to a fixed and vice versa. I will give you an example: If you have an ARM that is set to adjust upward in a few months,then you can refinance into a fixed-rate mortgage. Another example: If you have a fixed-rate loan and you know you'll move in two or three years, you could refinance into a lower-rate 3/1 hybrid ARM.

• Cash-out refinancing

It leaves you with cash above the amount needed to pay off your existing mortgage, closing costs, points and any mortgage liens. You may use the cash for any purpose.

These are some basic knowledge about refinancing mortgage, I will discuss more to make it more clearly in next post. I think it will be really helpful for you in the process of purchasing a new house in United State.