Refinancing refers to the replacement of existing loan with
a new loan under different terms. People may choose to refinance due to the
following benefits.
#1. Better
interest rate
People often choose to refinance when there are lower
interest rates available in the market due to market conditions itself or the
lenders are now more willing to offer them a better deal when their income or
credibility has been improved over time. With this lower interest rate, people can save
on their interest expenses.
#2. Lower
monthly payment
The monthly mortgage payment tends to be lower when the
interest rate is reduced. Another way to lower the monthly payment would be to extend
your loan for a further period.
#3. Better
cash flow
Lower monthly payment simply means extra cash on hand. This
extra cash can be used for other investment purpose, pay off other debts or
bills, home renovation, new car purchasing and so on.
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