Wednesday, 30 March 2011

Refinancing Loans

Answer: Obviously, the surgeon is the boy's mother!

Ah, another play-on-words riddle. Shame on me...

Here's a riddle for everyone to ponder, what does it mean to "refinance a loan"? What are you actually doing when you're refinancing a loan? Well in its most basic sense, it means to swap out your old loan with a more favorable loan.

Pretend you have a mortgage. So when you refinance the loan, you try to find the best mortgage rate on the market and take out a loan at that [presumably higher] rate. Then the money from this refinanced loan will directly pay off the old loan! It's a beautiful symmetry there, within the process of refinancing.

Now of course, the nitty gritty details. Math and math and lots of math is involved with calculating how best to refinance a loan. You want to look for companies/banks that offer "no closing costs refinance" or "no cost refinance" or "no fee refinance", you get the point. The main reason is because the institution that gave you your old loan will charge hefty fees for paying it off early. So if you really do have a homeowner loan or mortgage loan, especially if you have bad credit, make sure you have a no cost refinance!

And with that, I leave you with a very interesting article about Small-Business Lending. Happy refinancing!

42 comments:

  1. my skill in borrowing money has increased by +1. :)

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  2. all this talk of refinancing is confusing me. lol

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  3. @Jay.ca

    Yeh i just leveled up too xD

    Nice post!

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  4. that was pretty hard to follow :)

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  5. Wish someone could explain to me how to make money out of the air without taking loans and without need to rob anyone as good as you explained what refinancing loans means.

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  6. It actually doesn't need to be that complicated. It is simply a way to take advantage of the math incompetent culture we have in the US

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  7. So where's the riddle? I am disappoint.

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  8. Lol, alright. Another riddle sometime soon?

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  9. I find it funny that I read this in my accounting class as we are talking about loans.

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  10. Thanks for the info, I never knew that.

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  11. But lots of people refinance and then lose their homes to foreclosure.

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  12. Thanks for the enlightenment!

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  13. Not looking forward to having to pay a mortgage :(

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  14. Actually i just did refinancing last week, thus i knew what the word ment ^^Good post though :D

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  15. This has always been my favourite topic during Economics class

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  16. You always have really good stuff.

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  17. Riddles and quality information? Yes.

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  18. Cool! your posts always get me thinking

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  19. you're like the real world riddler.

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  20. I have to agree with schultzz lol. your certainly a brain wizard or something.

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  21. Good writing. Just discovered your blog. Will follow!

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  22. glad this isn't a mess i have to deal with in my life yet lol

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  23. i like to pretend alot of things

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  24. Why thank you I'm still dealing with a student loan and the interest that comes with it.

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  25. haha puzzling thoughts indeed.

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  26. ugh loans.... why couldn't i have been born into a rich family? but nooooo i get to pay for my own college.... anyways i like your blog(s) keep up the good work :)

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