Boston Bankruptcy Attorneys

Refinancing

Refinancing is the term given to the idea of replacement of an existing debt obligation with a debt obligation bearing different terms. The most common form of consumer refinancing is for a home mortgage.

Refinancing is frequently undertaken to:

• Reduce the interest rate or interest costs
• Extend the repayment time
• Pay off other debt
• Reduce one’s periodic payment obligations
• Reduce or alter risk
• Raise cash for investment, consumption, or the payment of a dividend

Refinancing can alter the monthly payments owed on the loan either by changing the loan’s interest rate or by changing the term to maturity of the loan. In many cases, more favorable lending conditions can reduce the overall borrowing costs. Refinancing is used in the majority of cases to improve the overall cash flow.

This tactic can be used to reduce the risks associated with an existing loan. Interest rates on adjustable rate mortgages and mortgages shift up and down based on various indices used to calculate them. By refinancing an ARM into a fixed rate one, the risk of interest rates increasing dramatically is removed. This ensures that a steady interest rate will be maintained for the duration of the loan.

Refinancing a loan or a series of debts can help a person in removing high-interest debts like a credit card with lower interest debts like those of a fixed-rate loan. A lender can reduce borrowing costs by closely aligning the cost of borrowing with the general creditworthiness and collateral security available from the borrower.

Contact a Boston Bankruptcy Lawyer

If you are unable to pay all of your bills every month and are considering filing for bankruptcy, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346 to discuss your options.