Should I Refinance Now?Posted on: April 20, 2010
There are various reasons for why people choose to refinance their mortgage. It is important to carefully research when refinancing and analyze the best option in each specific situation. While the idea of having an extra lump sum of money is appealing, it is important to consider the options, especially during these rough economic times, it is important to keep in mind Long-term goals and ramifications that would be affected by refinancing. One report issued by the United States concluded that more than half of property owners are paying too much for their mortgages and many people are locked into mortgages not suitable for their financial situation, in these circumstances, refinancing is beneficial to the homeowner and should be given considerable thought. Below are some factors to consider before refinancing and reasons why it may be a good option.
Concerns about Refinancing
It is common for homeowners who are looking to refinancing to have questions and not understand resources that may be available to them. A person's credit rating is always taken into consideration when applying for a new loan. If a person has a low credit score, the chance of getting a low interest rate is slim. Another factors that are taken into consideration include the duration of a loan and how long the person is planning to stay in their current location, as well as if a person is close to paying off a mortgage, it may not benefit to start over. There are typically fees associated with refinancing that need to be paid upfront in order to take advantage of the associated offer. If the price of the fees is not covered, it may end up costing a person more in the long run. Homeowners should seek the advice of a professional and licensed consultant before entering into any legal agreement to ensure that it is in the best interest of the individual.
Reasons to Refinance
In the right circumstance, refinancing could be one of the best financial decisions made by a homeowner. Consider the reasons to refinance, such as locking into a lower interest rate, or having a lower the monthly payment, and taking advantage of lengthening or shortening a loan. Perhaps a person is in debt and looking for an alternative other than filing for bankruptcy. A debt consolidation refinance can help reverse a negative financial situation. This type of refinance is made to consolidate all bills into one payment lower than what the loan payment currently is. Another reason people decide to refinance is for extra cash. This is what's called cash-out refinancing. Cash-out refinancing allows a person access to a lump sum of money which can be used for any purpose desired.
If refinancing is the way a person decides to go, it is important to have a trusted lender. Consult the Better Business Bureau about the company and do not be afraid to ask for references. A company that is reputable will not hesitate to provide contact information of clients from the past.