Refinancing Mortgage Lending Practices...
When a mortgage
allows a borrower to
obtain further money
advances at a later
date, it is called
an
open-end-mortgage.
The amount of the
advance is usually
limited to the difference
between the original
home loan amount and the
current amount
owing. Terms of
repayment will
depend on prevailing
interest rates and
the condition and
value of the pledged
property at the time
of the
advance.
The alternative
is to refinance a
home mortgage by
obtaining a new loan
that is large enough
to pay off the
existing loan and
leave cash left
over. Refinancing a
home mortgage is
a popular way of
taking cash out of a
property that has
appreciated in
value. For example,
suppose you bought a
house in 1970 for
$40,000 using
$10,000 cash down
and a mortgage for
$30,000. Today the
house is worth
$100,000 and the
mortgage balance is
$25,000. If you can
qualify financially,
you can get a new loan on the house
for $75,000. This
would pay off the
$25,000 existing
loan and leave
$50,000 in your
pocket. Your new
payments would,
however, be much
larger and would be
at current interest
rates.
Refinancing
To Reverse Mortgage
|
