Share This Article
A term often used to describe a complex mortgage product that allows mortgagors to refinance homes and other types of assets into a single loan. The typical example would be a home equity line of credit that allows a consumer to refinance the mortgage on the home and some other assets into a single loan.
This is the sort of thing that could really get your head bobbing. It’s also an easy way to get yourself into trouble with the bank if you’re not careful. For example, if you refinance a home to your new credit card, the bank might charge you higher interest on that loan, but it might also allow you to pay off other debts in the same amount.
The same situation could happen if you refinance an existing mortgage to a second mortgage, or even to a line of credit. Or if you refinance an existing line of credit to a second one, or even to a home equity line of credit. The first loan, which is usually a consumer credit line, can be modified with a new interest rate. And the second loan can be modified with a new principal amount.
So if you have a loan with a variable interest rate, it is possible that you can refinance to a new fixed rate, which might work out better in the long term. The interest rate on a home equity line of credit is determined in part by the value of the real estate in which the line is held. If the real estate in question gets foreclosed upon, the interest rate on the home equity line of credit may drop.
With a new interest rate, a bank will now be able to charge you interest on your principal and interest payments on the loan to the end of the term – in other words, the interest rate on your home equity line of credit will go up. This might mean you can refinance and make payment adjustments on your line of credit. It might also mean the interest rate on the loan will go down.
This is a very important concept if you are in the process of selling your home. With a new interest rate, it is possible that you could lose money on your home equity line of credit. Now you might be able to refinance your loan, but that might not mean you won’t lose money on your mortgage. When you refinance your mortgage, it is possible that the interest rate on your loan will go up. This could lead to an unexpected increase in your principal balance.
But what happens if you do refinance your loan and the interest rate remains the same as originally? There is some precedent surrounding this since it was done in the past for people who took out a second mortgage on a home to refinance to get the same loan terms the first mortgageholder got. This is not an uncommon thing in the mortgage world.
Although it’s generally frowned upon in the mortgage world, it’s possible to refinance a mortgage loan for more money than you originally originally agreed upon. This is often done as a way to get rid of the debt after the home has been paid off. The reason for this is that the new mortgage holder can use the equity in the home to refinance the original mortgage.
At the same time, the mortgage company may also have to give up some of the equity (as they are now a joint owner of the home so each has to do what the other wants to do) so that the new owner can refinance their loan instead. This is done to prevent the initial mortgage holder from being able to sell their home and take the money that they originally expected to get for it.
It’s a little different for the lender because they are both holding the same asset (the home), but they are in different funds. So they can’t simply go out and buy another home. It is also a little unfortunate because the mortgage is essentially a two-year payment. So if you pay off your mortgage and don’t take out a second mortgage, you are going to keep paying it for two years.
