If you are interested in a loan refinance, you are probably in need of money, or can’t pay off your loan with the current interest rate that is set to your loan agreement. When you refinance a loan, it is for a specific purpose. No borrower purposefully refinances a loan, whether secured or unsecured, to increase the loan’s APR or create financial problems.
Basically, the purpose of refinancing a loan would be to lower your APR and monthly interest payment, and to make a new agreement that is more agreeable to you.
If you are going to refinance a loan, a loan refinance will ultimately happen because a borrower is looking to receive one or more specific benefits. These benefits might be personal or financial but either way they serve to create relief or an improvement. Ultimately, you only refinance a loan to make your financial situation better for you.
For example, funds from some refinance loans are meant to be used for debt consolidation. Debt consolidation loan funds are used to pay off some, most or all your other debts and combine the multiple monthly payments into one solitary new payment each month.
Debt consolidation refinance loans are also meant to lower the average APR you were paying for multiple other debts. This type of refinance loan not only saves you money but also eliminates the risk of damaged credit. Late payments, high interest and penalty fees all build up when you get in over your head with multiple debts.
A debt consolidation loan removes that threat and protects your credit standing too.
Sometimes a borrower simply needs more cash. A loan refinance might serve as a cash infusion to help pay for an expensive vacation or a child’s education. Sometimes refinancing a loan or other debt serves the dual purpose of providing extra cash, while still reducing monthly payments on your total debt.
A mortgage refinance loan often serves to reduce the term of your mortgage. When you refinance for a lower APR it is possible to pay your mortgage off faster. Sometimes a mortgage refinance is specifically designed to convert a thirty-year mortgage to a fifteen-year loan as well.
Finally, changing the type of APR on your loan provides unique benefits when you refinance your debt. Changing an adjustable-rate mortgage (ARM) to a fixed APR can save you thousands of dollars if you convert the APR before the ARM increases. Check your equity and FICO score to see if you qualify for a refinance loan to save you money today.