Question

Please explain the right timing and circumstance for refinancing a home mortgage loan.

Answer 1

Refinance occurs when the lender pays off the current debt and issues new debt in place of old debt with new terms and conditions. It is very important to understand personal situation while determining right time to refinance

The timing of refinance is often depends on motivation of home owner. Say if he wants to do savings then he might opt for refinancing loan with lower installment. Another example would be recession period. During recession one might lose their job and it becomes difficult to pay larger Installment in such circumstance it it better to refinance loan so that burden of larger EMI can be reduced.

Promotion or increase in income can again lead to refinance loan. with increased salary one would like to pay off debt as soon as possible . In this case he will opt for loan with larger installment

Thus it is personal motivation that decides whether to refinance loan or not.