When interest rates are low, plenty of homeowners rush to refinance before evaluating the true consequences of their actions. Sometimes a mortgage refinance can be the wrong move.
People often make poor decisions because of what is called "interest rate envy" around the water cooler. Do not jump at refinancing just so you can say you got a lower rate.
The first step when deciding to refinance is to establish a clear objective: 1) lower your overall payment regardless of the length of the loan, 2) shorten the term of the loan in order to pay it off sooner, 3) compare the length of time you plan to stay in your home to see if refinancing with the costs will actual result in a net benefit to you.
Borrowers must have good credit, an acceptable debt load for their income and enough equity in their home, among other requirements, to be approved for a loan.
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