Full Video Transcript
Refinancing a mortgage means paying off an existing loan and replacing it with a new one. There are many common reasons why homeowners decide to refinance, such as the opportunity to obtain a lower interest rate; the chance to shorten the term of their mortgage; the desire to convert from an adjustable-rate mortgage to a fixed-rate mortgage, or vice versa; the opportunity to tap a home's equity in order to finance a large purchase; and the desire to consolidate debt. It is important to note that some of these motivations have both benefits and pitfalls. And because refinancing can cost between 3 percent and 6 percent of the loan's principal and requires appraisal, title search and application fees, it's important for a homeowner to determine whether refinancing is really the best option. An experienced real estate attorney in your area can help you decide what is right.