At the end of the loan term there is still a remaining principal loan balance and the mortgage company generally requires that the loan be paid in full, which can be accomplished by refinancing. In refinancing, a mortgage company usually offers a range of interest rates at different amounts of points. A point equals one percent of the loan amount. Analyzing various interest rates and associated points may save you money. Generally, the lower the interest rate of the loan, the more points an institution will charge.
Some companies offer refinancing with no points, but generally charge higher interest rates.
At the end of the 2 years they would then pay the old market rate for the remaining terms. Deciding to Refinance Traditionally, the decision on whether or not to refinance has meant balancing the savings of a lower monthly payment against the cost of refinancing. Another way to make a refinance work for you is to refinance for more than the balance remaining on your old mortgage in effect, tapping your home equity, or cashing out, in mortgage speak. Thanks to favorable rates, you may be able to do so without boosting your monthly outlay. The best use for the extra cash is to pay off any higher-rate loans you may have.