Refinancing is a good idea for a lot of people because it can help then get rid of higher interest rates and at the same time help them pay off more of their loan so they wind up paying a lower principal. With the way interest rates have been dropping you’d be foolish not to give refinancing a go especially if you are paying higher rates from before.

1. Refinancing Boo-BoosTo Not Make
Refinancing is a good idea for a lot of people because it can help then get rid of higher
interest rates and at the same time help them pay off more of their loan so they wind up
paying a lower principal. With the way interest rates have been dropping you’d be
foolish not to give refinancing a go especially if you are paying higher rates from before.
That being said, you shouldn’t just jump right in without doing some work. Refinancing is
not just a matter of signing away your home as collateral – it’s also a matter of knowing
what needs to be known in order for you to get the most out of your home so you don’t
get hosed in the process.
One of things you need to look at is the value of your home. Yes, in some cases
property values do go up so your home now is worth more than what it was 5 or 10
years ago. However, it could also happen that the property values have depreciated
which means that no matter how high the value of your home back then it’s not worth
that today.
What does this mean for you? If you keep on pushing for a higher value than what your
home is worth not only will you find it difficult to find a refinancing option but even if you
do you will wind up paying a lot in fees and interest rates which defeats the purpose of
refinancing.
Speaking of fees and the like please do not turn a blind eye on these things.
Surprisingly, not everyone takes a closer look at these things. They are all enticed by
the low interest rate that they disregard the added costs such as the closing amounts,
the points being used and the other fees that you have to pay out of pocket.
Not locking the rate is not good. The reason you’re refinancing is to get a lower interest
rate (at least it is the reason for most of those who refinance). However, if you hold off
locking the rate because you think it will still go down is deluding yourself. While it can
go down there’s also a chance it will go up so you may wind up paying more in interest
if you keep on floating.
Deborah Koval shares her latest update.