People looking to have some extra money often look to refinancing their mortgages. Doing such a thing can lead to a lower interest rate and cash in your own pocket. However, there are some things to know prior to considering this.
Issues To Consider When Refinancing a Mortgage
First of all, it is important to know that most of the payments you have made against your first mortgage are interest. Mortgages, like most loans, are front loaded with interest. 90 percent or more of your payments, at the start, will be going solely to interest rather than principle (the actual amount owed). So, if youve been paying the mortgage for a few years, youve already paid off a good portion of the interest youll be paying for the duration of the loan. What this means is that if you do something like refinance, you will get a lower rate, but youll go right back to square one when it comes to paying interest again.
There is another option available for getting money, a home equity line of credit. This is a credit line available to you that the lender establishes based on the equity you own of your home. The more equity you own on the home, the more the credit line is. This is...
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