Mortgage Refinancing: When Not To Take It
While low rates are often tempting and may be a good indication that mortgage refinancing is a good idea, that doesn't mean it can apply to all. Strange as it may seem, a lot of homeowners will be better off sticking to their current loan and ignore the current low rates.
That said, there are certain situations when refinancing doesn't make any sense. Let us take a look at those scenarios:
When you don't plan to live in your home for long
This is really something you should heavily consider. A lot of homeowners believe that refinancing is a good choice whenever the rates are low. The fact is, there are certain fees involved in mortgage refinancing that could only be recouped by staying in your property for a certain period of time (called the 'break-even period") which may take several years. Hence, if you think that you will be selling your house a few years from now, mortgage refinancing may not be for you.
When the current market value of your property is low
Obviously, it makes no sense to refinance your mortgage if the amount of new loan is not sufficient enough to pay for the existing one. In the same manner, if the appraised value of your property is low, your monthly payment for the new loan may be higher than your current loan.
When you are paying for your loan for several years
Say you are on the tenth or twentieth of payment on a 30-year loan. Refinancing it to another 30 years will only increase the overall cost of your loan.
When you have a few years left on your loan
Even if you're in dire need of cash, it not a good idea to refinance your home with only a few years left in it. Extending your payment terms will push you to pay more. For example, you have 5 years left on your mortgage and you apply of refinancing which will extend it to 10 more years (15 years loan), the total cost of the new loan will be more than what you should pay for the 5 remaining years even if the monthly payment are significantly lower.
When you don't know how to budget your cash well
It is a common strategy to use refinancing to pay for credit card bills. While this may be a wise choice for some, others who cannot manage their finances well may find it rewarding at first but very painful in the end. Not only will you place your house on the line, you are also placing youre your whole financial standing at risk. (Take note: refinancing doesn't erase your credit, you are just restructuring it.)
When you have already used up all the equity of your home
One factor that will greatly influence the rates of your new loan is the amount of equity you have in your property. If you have already borrowed ninety percent of you more of your equity, chances are, you are just adding on your financial burden and not really benefiting from the advantages of refinancing.
When you have a bad credit score
Aside from equity, your credit score is a significant measure whether you get a good rate or not. So if you have missed payments and pilled up credit card bills, you may not be qualified to a better rate.
By your GoodBuddy Richard La Compte
You may contact me through my Help Desk
***Sorry Comments Are Temporarily Disabled!
My ArticlesMortgage Refinancing: It's All About Timing
Mortgage Refinancing: Getting The Best Rate
Mortgage Refinance Saving Tips
Thinking Of Refinancing? Evaluate Your Current Mortgage First
Four Questions To Protect You From A Mortgage Refinancing Mistake
Solid Reasons For Refinancing Your Home
How Get The Go Signal For Mortgage Refinancing
Mortgage Refinancing: When Not To Take It
FAQs On Home Mortgage Refinancing
Home Mortgage Refinancing: The Ups And Downs Of Having A Bad Credit Score
Signs Of A Good Mortgage Refinance Company
Why Work With Mortgage Refinance Specialist?
Quick Steps To Refinance Your Mortgage
Reasons To Refinance Your Mortgage
The Benefits Of Mortgage Refinance
Home Mortgage Refinancing Tips To Get A Loan
Vital Pieces Of Home Mortgage Refinance Advice
Making Home Affordable Plan Is It The Right Choice For Home Mortgage Refinance?
Mortgage Refinancing The Steps And Insights
Mortgage Refinancing Factors You Should Know
Bad Credit? You Can Go For Mortgage Refinancing!
Home Mortgage Refinance How To Make It Easy
Mortgage Refinancing: When Is The Time To Make A Move?
Four Persons Who Shouldn't Go For Mortgage Refinancing