The basic information that you need to know about refinancing is:

Refinancing of a mortgage credit allows:

1. to cut down a monthly payment with the help of reduction of the interest rate and/or getting longer term of the credit
2. to increase the sum of the debt by the following way — at transferring the debt a new creditor can provide the client with an additional sum against a pledge of the same real estate, if the financial situation of the client allows that.
3. to consolidate the debts

What is refinancing?

Let’s examine that on an example. (all the sums are accidental) For example you have in a bank “A” a mortgage credit for a sum of 10 000 US dollars and the interest rate is 16% a year, on this credit you pay 244 US dollars by the annuity scheme, a pledge is an apartment, which market price is 50 000 US dollars. You have a three year credit in the bank “B”, you have taken this credit to purchase a car that costs 8 000 US dollars, the interest rate is 13% a year, so the payment is 89 US dollars, the pledge is the car. In the bank “C” you have a credit line 3 500 US dollars the term is one year and the interest rate is 28% a year, by which you have chosen the maximal sum and now you pay 483 US dollars every month. Thus the total sum of the payments is 816 US dollars.

At refinancing of the mortgage debt in the bank “X” for a term of ten years and with the interest rate 12,5 a year, you can get the maximal sum of the credit, which is 70% of the price of the house, the sum is 35 000 US dollars, from which 23 000 US dollars will be used to pay off the credits in the banks A,B and C, and 12 000 US dollars can be given to the client by his/her wish as increasing the sum of the debt for the client’s needs. The total sum of monthly payment will be 513 US dollars, and this sum is 1,5 less than the previous sum of payment on all the credits. Moreover you will be served in a single bank instead of three banks.

I also would like to add something about income. During the whole history of mortgage crediting the certain coefficients of solvency have been worked in the world, the coefficients that allow to pay off long-term debts without hard problems. The payment of debts on the level 40-50% of a monthly income is considered as optimal. Accordingly at the first financial model the income must be about 1600 US dollars a month to provide comfort payments of the debts, and at the second financial model the monthly income must be 1000 US dollars. If this income is more than enough, than 600 US dollars will be a good saving in the family budget.

Lots of people nowadays are facing the problem of paying off a credit. Bad credit is a crucial issue which might solved by refinancing. These days lending market offers various options for home refinancing for house buyers. Those who are searching for a smart option like VA refinance, please go to this VA refinance site where you will also find info about VA refinancing and how to low down payments.

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