Introduction

Before we look at the help that you can get online on mortgage refinancing, it is prudent to first understand what mortgage and refinancing are all about. This will make us be in a good position to get the necessary help that various online sites provide.

What is a mortgage?

There are many definitions of a mortgage, depending on one's profession. However, all the definitions point to the same thing. A mortgage is a loan that can be provided by a bank, a building society or other financial institution that provides loans in general. This is why it is common to find many definitions of mortgage referring to it as mortgage loan.

A mortgage loan is a loan, which is only intended to be used to buy a house. In this case, the house becomes the security or collateral that the institution providing the loan has a claim on, in the event that a borrower defaults in repaying the mortgage loan provided. In such an event, the institution has the right to sell the house in order to recover its loan.

A mortgage loan is however nor restricted to buying of houses. A homeowner can obtain a mortgage loan by offering his/her house for the loan, in what is referred to as residential mortgage loan. This may be for the purposes of buying another house.

Generally, mortgage loans are not short-term loans. Most mortgage companies fix mortgage terms at either 15, 20 or 30 years, with the borrower required to make monthly payments until the whole loan is repaid, with interest. A mortgage is evidenced by a written and signed agreement between a lending institution and a borrower, an agreement that is commonly referred to as a mortgage deed.

What is mortgage refinancing?

Mortgage refinancing refers to the process of replacing an existing mortgage loan with another. A mortgage loan borrower may be forced to refinance for several reasons, some of which include:

- Low interest rate - A borrower may find a mortgage loan with a favorable low interest rate that may reduce the overall cost of servicing his/her current mortgage loan.

- Consolidation - A mortgage loan borrower may have other loans that he/she is servicing and may want to consolidate all the loans into a single loan to make his/her loan management easier. Generally, loan consolidation results into a longer period of loan repayment.

- Monthly payment - A borrower may opt for mortgage loan refinancing to enable him/her make affordable monthly payments. This also results in longer period of loan repayment.

- Changes in interest rate - A borrower with a variable interest rate loan may want to switch to one that has a fixed interest rate, ensuring that he/she pays a fixed monthly loan repayment no matter changes in the financial market.

Mortgage refinancing requires a borrower to consult the financial institution, which provided him/her with the current mortgage loan. A borrower may be forced to meet certain conditions before the refinancing can be effected. Some of the conditions that a borrower may be forced to fulfill include payment of a percentage of the existing mortgage loan.