Refinancing

The act of refinancing involves replacing a loan or debt obligation with other debt.http://www.bankers.asn.au/default.aspx?ArticleID=1423 The term is frequently associated with mortgages and home loans, though it can refer to both secured and unsecured debt. It may also be done as part of debt consolidation. This page contains information about refinancing including when and why consumers and businesses may decide to refinance.

Mortgage refinancing involves replacing one mortgage with another or combining two mortgages into a single debt with a single lender. This can be done in order to lower the overall interest rate, lower monthly payments, or to free up cash for an expenditure or investment. Money received from a cash out refinancing can also be used to pay off high interest credit card debt.http://www.fool.com/personal-finance/credit/9-ways-to-pay-off-debt.aspx

Debt consolidation allows consumers to combine multiple credit accounts into a single debt with a single monthly payment. In certain cases, that payment may be lower than the total dollar figure of previous minimum payments, thereby increasing cash flow. However, critics note that debt consolidation involves extending the term of the loan in certain cases. When the term is extended, the consumer is likely to stay in debt for a longer period of time compared to if there is no consolidation.http://www.daveramsey.com/article/the-truth-about-debt-consolidation/

The content in this page is not a substitute for professional financial advice. Please contact a finance professional before using the information presented here.