Mortgage Info

There are a few factors that contribute to making a mortgage refinance of a mortgage easier than obtaining a mortgage for the purchase of a property. If you have done either of these before then you probably already know what the differences are. If you have never had a mortgage or about to embark on getting a mortgage for the first time or are considering refinancing, you might find this interesting.

Purchases vs. Refinances

1. Timeframe: when a home is being purchased there is a contract between the buyer and the seller that mandates a closing date. Since the borrower in a purchase situation is at the mercy of this closing date, they must find financing and close by this time. Atypically timeframe for a purchase is 30 business days
2. Need: Unless a purchaser is paying cash, which makes up a very small percentage of residential purchases, mortgage financing is needed in order to buy the property. In a refinance situation, it can certainly help to save the owner money of their monthly mortgage payments, but they do not have to refinance
3. Right of Rescission: Even if a borrower decides to refinance and actually closes on the new mortgage, a refinance client has what is called a right of rescission. This means that the client can opt to walk away from the new mortgage within a three-business day period from the time of closing. Again, since a purchaser is under a contract to get the financing and buy the house, they run the risk of breaching the contract and possibly losing money in the form of deposits and third party costs if they walk away from the deal.

These are just three of several reasons why refinancing a mortgage is easier than a purchase mortgage. While a purchase mortgage has different a different purpose than a refinance mortgage, the ultimate outcome is the same – people want to achieve their goal, whether that be owning a property or lowering their monthly mortgage payment.

Relevant Websites

• Refinance Mortgage Rates and Information (MortgageLoan.com)
• Refinancing Your Home (Hud.gov)