For most homeowners, there are many questions to be asked when considering refinancing their home.  Here are the most frequently asked questions about mortgage refinance information.

What is refinancing?
Refinancing is when you take out a new loan to fully repay an old loan, using the same property as collateral.



















What kind of loans are there under the refinancing loan umbrella? 
There are a few types of loans, including the traditional refinancing loan that replaces your interest rates and possibly the length of the loan, an interest only refinancing loan, which gives you the option at certain times to only pay the interest on the loan and to forgo paying the principle of the loan till a later date and the optional ARM loan which gives you four separate options.

What are the options of an optional ARM loan? 
There are four, they include a minimum payment option (where you pay the lowest amount per month possible, usually consisting of some of the interest, without paying the principle), an interest only option, a 30 year standard amortization option and a 15year amortization option.
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Mortgage Refinancing

Why refinance a home mortgage? 
While everyone’s situation may be different, for the most part, most homeowners refinance their home to take advantage of lower interest rates or better loan terms.

What is the difference between refinancing and taking out an equity loan?
A home equity loan is a second mortgage that cashes out the built up equity in a home.  A home equity loan uses your home as collateral to secure the loan.  A refinancing loan is not a second mortgage; it replaces your original mortgage.  While it is possible to cash out equity with a refinancing loan, these types of traditional loans do not include equity cash outs.
What are some of the fees involved with a refinancing loan?
There are two main fees, points and traditional fees.  Points are sometimes called discount points and equal to 1% of the total amount of the loan.  Sometimes your lender will require you to pay 1, 2, 3 or more points.  Traditional fees include closing costs, document fees, attorney fees, a property appraisal, etc.

What is a cash out refinancing loan?
A cash out refinancing loan is a traditional refinancing loan with the ability to cash out existing equity built up in the home. Equity is your home’s current value, less the debt.  If your home is worth $200K and you owe only $100K, you have $100K in equity built up, in which you can access with a cash out refinancing loan.