| It may seem strange that a home mortgage loan may | | | | request to refinance their mortgage. Sometimes a |
| not have anything to do with buying a home. Buying a | | | | new lender will make the offer to refinance an existing |
| home is only one purpose of such a loan. Many people | | | | mortgage loan for a home owner. Smaller monthly |
| use these types of loans for different reasons based | | | | payments are usually the purpose of this type of loan. |
| upon their needs and financial situation. | | | | This can be achieved through either a lower interest |
| Home mortgage loans that are used to purchase a | | | | rate or by extending the loan period out for several |
| home are the kind that most people are familiar with. | | | | years. Extending the loan may lower the monthly |
| Usually a person becomes a home buyer because | | | | payment but it also will increase the total interest paid |
| they want to stop throwing their money away paying | | | | dramatically and so should be used only as a last |
| rent and build an estate. Usually a 15 to 30 year loan | | | | resort. |
| with the lowest down payment and lowest monthly | | | | A home equity loan is another type that is not used for |
| payment is preferred by the buyer. This type of loan is | | | | buying a home. It is often used for other purposes that |
| strongly promoted by both real estate agents and | | | | require a lot of money such as home repairs or |
| mortgage lending institutions due to the large fees and | | | | funding a college education. Since the equity in the |
| interest payments they receive for processing the | | | | home is used as the collateral for the loan it is usually |
| loan. | | | | fairly easy to get approved for one. The exact terms |
| A loan to refinance a mortgage is also very common | | | | of the loan are usually based on the offer made by |
| although it has nothing to do with buying a home. In | | | | the lender and the credit history of the borrower. This |
| fact it usually has more to do with keeping an existing | | | | is not a simple interest loan. The amount of interest |
| home. If people start having trouble making their | | | | paid and the amount of the monthly payment is |
| mortgage payments or if mortgage interest rates | | | | computed in the same way as any other home |
| have fallen people will often contact their lenders and | | | | mortgage loan. |