What is refinancing exactly when can i do it to my house?

Deeanna
we just purchased a home and someone told use we should refinance to lower our payments, but another person told us that we get penalized if we do it early? i'm comfused.

Flor
Refinancing is when you can get a better interest rate or get money out of your house because it's appreciated or both.You may have an early payment penalty in your mortgage -- you have to read the papers to find out.You would want to refinance if interest rates fall more than 1-2% what you negotiated originally, or if you have an adjustable mortgage and can do better (lower payments, set interest rate) by going to a fixed mortgage, or if your home has increased in value and it makes sense to do something else with the money.If you just purchased a home, none of this would probably apply.

Alycia
Paying off an existing loan with the proceeds from a new loan, usually of the same size, and using the same property as collateral. In order to decide whether this is worthwhile, the savings in interest must be weighed against the fees associated with refinancing. The difficult part of this calculation is predicting how much the up-front money would be worth when the savings are received. Other reasons to refinance include reducing the term of a longer mortgage, or switching between a fixed-rate and an adjustable-rate mortgage. If there are prepayment fees attached to the existing mortgage, refinancing becomes less favorable because of the increased cost to the borrower at the time of the refinancing

Grover
You financed your house when you bought it. If you add a 2nd loan, that is called refinancing. If you get a new loan to replace the original loan, that is refinancing.You can do it for any reason and at any time. The problem is that refinancing cost $3, 800. That money is gone. You can not get it back if you sell the house. You will probably not get penalized for refinancing. Unless you got your original loan at 10% interest because you had bad credit and that bank won't let you refinance..