I would like to know how refinancing works; Here is what I understand: I buy a house for $100,000 (assuming 100% loan and no fees & charges for simplicity) and borrow $100,000 from Bank A. Bank A pays the seller $100,000 and gives me the house. I repay the bank $100,000 over time and the bank makes profit when they charge me interest on borrowing plus fees and charges. After some time my repayment amount to Bank A is $70,000. I, then, refinance to Bank B. Now Bank B pays off $70,000 to Bank A and now I need to repay Bank B $70,000 over time for which they will charge me interest.
Right?
In essence you have it in one obviously there is title and mortgage registration but your fundamentals are correct.
Richard Taylor | Australia's leading private lender
Do not forget Bank A 's customer retention system swings into action to try and save the customer from refinancing away from them.
Also check and make sure Bank A do not have punitive break fees !
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