Refinancing involves replacing an existing loan with one with different terms, often to lower monthly payments or tap into home equity. Refinance loans have become popular ways for borrowers to lower monthly payments, reduce interest rates or gain access to home equity.
Refinancing depends on many variables, including your current financial status and property’s market value. That is why it is essential that you understand more of its basics before making the decision if refinancing is right for you.
Collateral
Collateral is an asset a borrower puts up as security against a loan, such as real estate, vehicles or financial assets like stocks and bonds.
When used in lending, collateral helps reduce credit risk and allow lenders to extend loans that would otherwise have been denied; additionally it may be used in debt collection proceedings, bankruptcy cases and legal battles. Understanding more about collateral will enable you to make smarter financial…