What is the difference between a purchase and a refinance in Mortgages?
What is the difference between a purchase and a refinance in Mortgages?
mortgages
- Stay Connected
- Latest Posts in RSS
- Antique Insurance
- Auto Loans
- Auto Loans Q&A's
- Bankruptcy
- Car Insurance
- Commercial
- Consolidation Loans
- Credit Card Q&A's
- Credit Cards
- Credit Repair
- Foreclosure
- Government Grants
- Health Insurance
- Home Insurance
- Home Loans
- Identity Theft Insurance
- Insurance
- Insurance News
- Insurance Q&A's
- Landlords Insurance
- Loan Modification
- Loan News
- Loan Q&A's
- Loans
- Mortgage News
- Mortgage Q&A's
- Mortgages
- News
- Personal Injury
- Pet Insurance
- Refinancing Home Loans
- Secured Loans
- Student Loans
- Term Life Insurance
- Travel Insurance
- Unsecured Loans
- Young Drivers Insurance
- Latest Comments in RSS
- Latest Posts in RSS
- /
A purchase mortgage is used when you are transacting the purchase of a home. A refinance is used to replace the mortgage that was used when the home was purchased or was previously refinanced.
With the purchase it is the first time buying and financing. When you refinance is financing it again for a different rate, payment. It is like buying your house all over again, before you paid it off.
With a refinance, you already own the property and have a mortgage on that property. You just want to either lower your rate, adjust your term, or cash some of the equity out. With a purchase, the mortgage you are trying to obtain is new, and your first on the property. As far as terms of the loan, the interest rate, amortization, etc. are the same for both a purchase and a refinance.
Hope this helps.
Pretty straight forward actually. A purchase mortgage is something you would get when you want to buy a property. A refinance can occur when you currently own a property and want any or all of the following:
* Take some equity out in cash for other projects/things you want such as remodeling, etc.
* The current mortgage interest rate is higher than you can get by refinancing. This usually occurs when interest rates go down by at least 1 percent. You might want to refinance without taking money out and just reducing your monthly payment.
*For whatever reason, you got behind on your payments and want to get got up without having to come out of pocket.
Before you would refinance a mortgage, be sure of all the fees. Even if you don’t come out of pocket with money, there will be fees associated with the transaction which will alter the amount of equity you have.
Hope that helps.
Purchase is when you are buying the property from a seller, and often you will need an attorney to represent you. A refinance is when you already own the home, and you are refinancing the mortgage on the home for either better rate and term, or looking to take equity out of the home, you do not need an attorney for the refinance.