What You Need To Know Before Applying For Mortgage Refinancing
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If you’re happy with your mortgage and feel no pressure from the monthly payments you make, then you have no worries. But if you’re thinking that you might be able to save some money by refinancing under a lower interest rate or you simply need to lower your monthly payments, then you’re going to need to know some information about refinancing your mortgage. It can help you out if you’re really in a bind, but it’s also a very long-term commitment so you need to analyze all possible outcomes before signing yourself off to another decade or more of mortgage payments.

The Perks of a Good Refinance

Aside from looking to make smaller monthly payments over a longer period of time, you should really consider refinancing if you stand to reduce your interest rate. If you take a look at current mortgage rates and believe that you’ll be able to get an improved rate, then get in contact with your lending institution of choice and have an estimate drawn up for your refinance. While you may be paying over a longer period of time, if you can lower the interest rate by even 1% then the refinance will save you money in the long run. But if your credit rating is worse than when you originally got the mortgage, you probably aren’t going to be offered a terrific refinancing option and you might just add another “hard pull” onto your credit history when the lending institution goes to reevaluate your credit standing. Every “hard pull” lowers your credit score, so you don’t want to have companies looking into your credit report too often.

What It’ll Cost You

In most cases, a refinance will go hand-in-hand with additional fees and charges, such as closing costs, and that raises the question of “how much will this cost” and wondering about “how to close a mortgage refinance.” While it is true that you can find some lenders who will waive refinancing fees to make the initial costs more affordable, they may or may not give you the long-term rewards you were looking for. Given the long lasting nature of mortgages, even a slight change in your interest rate can keep tens of thousands of dollars in your bank account and that makes them incredibly worthwhile, but you need to make sure that you can handle the closing costs and other expenses that can go along with a refinancing. If you won’t be able to survive until your refinance starts saving you money, now might not be the time to refinance. As always, make sure to check your credit report often to see how you stand with credit when considering these decisions.

The Repercussions of a Refinance

When looking for the answer to “should I refinance my mortgage”, you need to consider all the outcomes. With mortgages, you’re talking about decades of debt, and any years you may have knocked off with payments up until this point are all washed away when you refinance. Granted, you will still be repaying the same remaining principle, but it’ll be in smaller payments over a longer period of time. Is it worth being in debt for another decade or two? If the lowered interest rate ends up saving you money in the long run or if you absolutely cannot afford your current payments then it’s probably worth it, just don’t be the one who gets a rude awakening five years down the road because you misunderstood the terms of the refinance relative to your financial standing.

A refinance can be a great way to get out of a bind or just a simple way to save a lot of money in the long-run, but it’s important to remember that the keyword here is “long-run”. If you do everything correctly then you’re in for an easy ride while you pay through that extra decade, maybe even clocking into the Bahamas once a year with the family with all that saved money, but all those dreams can go right down the toilet if you don’t evaluate your situation smartly, so make sure to do the research and check your credit report to keep track of what your credit rating is.


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