Refinancing your home loan is the process by which you pay off an existing home loan by transferring the loan to another lending institution. It allows you to change the conditions of your home loan to suit your needs and gives you better opportunities. Refinancing lets you take advantage of lower interest rates and gives you more financial flexibility.

To refinance your loan, take out a new loan and use part or all of the funds to pay off the existing home loan. The new lender is usually from a different institution, but some people can refinance with the same bank or lender, depending on the terms. If you choose to move to a new lender, the new lender will take care of paying off the old loan.

People refinance their loans for many reasons. Usually it’s because they’d like to avail of cheaper interest rates, pay off debts faster, raise money for a big purchase, and shorten the term of the loan. Remember that refinancing is not always the solution for all cases. Make sure that you must review all your options before choosing to refinance your home loan.

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Just because you’re strapped for cash doesn’t mean that you can’t build your dream home. The Government Service Insurance System (GSIS) now has affordable housing loans and refinancing schemes that you can use through their Bahay Ko Progarms.

Bahay Ko Acquire allows you to purchase a house and lot, condominium unit, townhouse, or any housing unit that’s either brand new or secondhand. You can also use this to purchase a lot and build a house from scratch. The Bahay Ko Construct lets you build a house on a lot registered in your name. For home improvements and any repairs in an existing home or unit, there is the Bahay Ko Improve. Bahay Ko Refinance allows you to transfer your housing loan from another institution to GSIS.

Loans reach up to Php 300,000 at a 12% interest rate per year. Maximum term of the loan for all packages above Php 180,000 is 25 years. For more information, visit the GSIS website.

Filipinos and non-Filipinos residing in the United States can now own real estate in the Philippines through the Philippine National Bank’s Own A Philippine Home Loan Program. Under this program, you can acquire a lot, a house and lot, a condominium unit, a townhouse, or a rowhouse. Interest rates depend on the Wall Street Journal Prime Rate, usually variable at around 3%.

Other loan types covered by this program are the construction of a house and lot owned by the borrower can mortgage the lot in favor of PNB, renovations of a house owned by the borrower, and refinancing of a peso home mortgage loan.

Loans for a lot with proposed or ongoing construction of a house will be up to 80% of the selling price.   For the purchase of house and lot, loans will go up to 60% of the selling price. Loans for renovations of an existing house can reach up to 80% of the real estate property.  Repayment of the loan should be in US dollars and will take a maximum of 20 years for a house and lot and 10 years for a lot only.

For more information on the Philippine National Bank’s Own A Philippine Home Loan Program, visit the PNB Los Angeles website.

It’s not true that you can’t buy a house if you’ve got a few problems with your credit. If you believe that you have to pay your mortgage off as soon as possible, or other similar beliefs, you may be subscribing to mortgage myths that might cost you more money.

Fixed-rate mortgages are best

Fixed-rate mortgages that last 15-30 years are only the best if you intend to live in your house forever. Research shows that the average homeowner only spends nine years in their house. First-time home buyers tend to buy starter homes and move to bigger ones as their family grows. If you know you’re going to stay in your house for only several years, it’s probably better if you get an adjustable rate mortgage that will last three, five or ten years.

Pay your mortgage as soon as possible

It’s good to pay off your mortgage early if you’re trying to satisfy a long-term financial goal and retire without any debts. But there are some instances where your money should go into paying off higher-interest debts like auto loans or credit card bills. It would also be a good idea to invest your money into something that will generate greater returns, then pay your mortgage after taxes.

You must give a down payment of 10% or 20%

This is not always true. There are a lot of mortgage lenders who only ask for a 5% down payment or less for those who cannot afford to give more.

A bad credit record means no mortgage

Lenders always find ways to help out people who have bad records. The term “subprime” refers to a loan for people who have serious credit problems that demand a higher loan rate. Those who have had a house repossessed or have gone bankrupt usually fall under the subprime category. However, there are lending agencies that also cater to subprime borrowers and analyze their credit record so the borrower doesn’t have to pay more than he or she should.