How do I refinance a loan?

Refinancing a loan is the act of changing the terms of your original loan and replacing it with a new loan.  Many people refinance their original loans to access lower interest rates on the loan’s outstanding principal.  Since 2008, many countries have enacted quantitative easing which has brought down the cost to borrow significantly.

Besides lowering the interest rate, some people refinance to gain access to equity accumulated in assets.  You see this often in real estate and the term used is called a cash out refinance.  

Another reason to refinance is to extend the term of your original loan.  This could be useful in the case where you need to lower your expenses for cashflow purposes.  An example of this would be if you had an original loan that was to be paid back over a 30 year term. If you were paying the loan in good standing for 10 years your would have 20 years remaining.  You would be able to refinance and start a new 30 year cycle.  The monthly amount owed would likely decrease in this example.  

The amount you can borrow is subject to underwriting so if your current employment, income, and credit score could affect your eligibility.  Also, the market value of the home is a big factor in a mortgage refinance as you will need to have an appraisal by a professional to properly asses the value of the property.  

Student loans refinances have been popular in recent years as companies that specialize in loan consolidation have gained prominence.  There are many different options to refinance student loans so it is best to speak to a professional before pursuing.  

I have been making my mortgage payments every month but sometimes late. Can I refinance my loan to lower my interest rate?