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Can You Refinance Your House Multiple Times?
By DANIEL FEININGER
Refinancing your mortgage renews your loan terms on the same property, and can be used to cover the cost of unexpected expenses or to take advantage of a lower market rate, reducing your total remaining mortgage bill. There are no rules as to how many times you can refinance, but lenders typically only allow you to refinance 80% to 90% of the total loan value.
Refinancing essentially replaces your mortgage with a new loan, so you’ll want to have more than 10% of the equity in your property and enough to cover origination fees and expenses. When you refinance, you can shorten the remaining time left on the debt to reduce interest costs, or extend the loan term and cash out some of your equity while reducing monthly contributions.
As you reduce your interest rate and the length of your mortgage, your savings could be immense, so keep an eye out for fluctuating market rates. Even a 1% decrease in your loan rate can save you thousands of dollars to use for other living expenses, or you can put that money directly toward your mortgage’s balance to minimize the total owed.
A good way to strategically use your refinancing opportunity is to invest in renovations for your property that will increase your home’s value. You’ll need to carefully calculate these numbers, and sometimes the best endeavor is a break-even transaction instead of taking out a new personal loan.