Refinance Your House in Pittsburgh

In a very broad sense there are two types of mortgages. There is a mortgage to purchase a property. And there is a mortgage to refinance a property. Once occurs on the front end, one occurs on the back end. Most people understand in great depth the mortgage to purchase a home. They do their research on rates, and how much down, and fees involved, but the refinance doesn't get this type of attention.

When refinancing a home you generally either have equity in the property and want to pull out cash out in the form of a loan from the bank, or they want to lower their interest rate by getting a new loan at a lower rate. Both cases can be beneficial for the consumer. Many cases, investors will have a high interest loan to finance the project and will refinance out with a long term loan with a bank. These rates are much lower than the initial purchase is. Individuals that have paid off their home or have a great deal of equity can also find value in a refinanced loan.

This is when they get a new loan on their property to then get paid out a lump sum of cash. The owner can do whatever they please with the funds, but they now have a loan and monthly payment to make. If rates are low and fixed, this can be a great strategy to pull out extra cash if needed for expansion or needing money in a pinch. It is important to understand not only the rates you are committing to, but also the fees. There are closing fees involved in the process. This includes appraisal costs, notary fees, recording fees, and any service charges by the lender. These costs normally will be added into the loan, but you may have to come out of pocket for some of these costs to get the new loan.

It is also crucial to understand the term and rate of the loan. Is it a fixed rate, variable rate, fixed for 5 years then changes to market rate? There are several ways lenders can spin the loans and ways to charge interest. Make sure you understand the details of these and that you aren't signing into something that is great today, but can be a nightmare tomorrow.