Check rates and Refinance your home today!
Today’s finance and real estate markets are experiencing a high level of uncertainty that nobody would have predicted five or six years ago. This is an important question that is often overlooked by people who rush to consolidate loans or bills, thinking it is the only way to get out of debt. They are swayed by the promises of commercials for companies that say they can save people thousands of dollars and help them get back on track financially. It is necessary to realize that refinancing does not ensure that one will get out of debt. Unfortunately, most people see it that way. However, there are many situations in which refinancing will actually put more of a financial strain on a person in the short-term. If someone is consistently making payments on a loan, and that person actually has a bit of money each month to put away, refinancing might cause more harm than good.
TIP: We recommend using a mortgage calculator to determine if you need to refinance.
When Is Refinancing the best way?
There are three major things, at least in the world of mortgage loans, that refinancing can be good for:
- First, if a person is looking to decrease monthly payments, there are refinancing plans that will allow him to do so. These refinanced loans are usually easier to qualify for, and they can help people save more money initially. However, these plans will generally stretch out the lifespan of a loan, often extending it to 30 years.
- Second, if a person is not concerned with low monthly rates, but wants to shorten the length of time he will spend paying off the loan, there are plans that increase monthly payments and allow a person to actually save a considerable amount of money in the long run, because the shorter loan term will decrease the amount of interest that will be paid.
- Third, if someone owns two properties, refinancing can help them consolidate those home loans into a single, affordable monthly payment.
There are a number of questions that must be answered when people are deciding if refinancing will be good for them. It is best to consult with a professional on the subject. Mortgage services and credit counselors will be able to break down a person’s monthly obligations and decide if refinancing will be beneficial. They can also point people towards other options such as roll downs, ARMs, and 125 percent loans.