Mortgage refinancing can be a sound financial decision, especially when it leads to lowering the amount of interest you pay over the life of the loan. It can also be essential in the event you currently have an Adjustable Rate Mortgage and see a steady increase in the interest rates you are paying.
Mortgage Refinancing Tips
Mortgage refinancing is not a good decision for everyone. You need to carefully consider a few factors before trying to refinance:
- Can you get a better interest rate than you already have?
- What sort of closing costs will you have to pay? Are they so high that the costs will negate any savings in interest payments?
- If you are looking to refinance and get cash back, is this a financially sound decision?
- Would you be better off seeking a loan modification rather than taking out a new mortgage?
In an age when so many people are buried in debt and looking for an easy answer to meeting their obligations, taking a second mortgage on their greatest assets - their homes - may sound like the perfect answer. In some cases, it may be, but consider the risk involved before you use your home to consolidate debt or pay off creditors. If you do not change your spending habits, you are likely to find yourself in more debt. This cycle of poor debt management can ultimately lead to losing your home.
Make an Informed Decision
If you are unsure whether mortgage refinancing is the right move for you, consult with a professional financial consultant or accountant. An expert can look at your full financial picture and help you determine if refinancing will improve your long-term financial health.