Refinancing: Refinancing is the process of paying off an existing loan by taking a new loan and using the same property as security. Homeowners may refinance to reduce their mortgage expense if interest rates have dropped, to switch from an adjustable to a fixed rate loan if rates are rising, or to draw on the equity that has built up during a period of rising home prices. Closing costs for a refinance are generally comparable to those for any mortgage. If you’re refinancing to reduce your payments, you’ll want to calculate how long it will take before you recover the closing costs and begin to save money. If you’re planning to move within a few years, refinancing may not actually save you enough to justify the closing expenses. And if you refinance to use some of your home equity, you run the added risk that prices could drop and you could end up owing more on your mortgage than you could realize from selling your home.

 

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Refinancing: Refinancing is the process of paying off an existing loan by taking a new loan and using the same property as security. Homeowners may refinance to reduce their mortgage expense if interest . . . View Full Definition

Cash-Out Refinancing Loan: A loan that refinances a prior mortgage and that provides additional cash to the borrower. Funds.

Lag Response Of Prepayments: A delay of typically about three months between the time the weighted-average coupon of an MBS pool crosses the threshold for refinancing and observation of an acceleration in prepayment spe . . . View Full Definition

Overshooting: The tendency of a pool of MBS to reflect an especially high rate of prepayments the first time it crosses the threshold for refinancing, especially if two or more years have passed since the . . . View Full Definition