Although refinancing your mortgage can lower your monthly payments, there are a few reasons why you should not take that step. Simply put, refinancing is not for everyone or every financial situation. There are at least 4 reasons why you should avoid refinancing your mortgage.
1. You Don’t Plan to Stay in the House
If you want to move to some other place, you are better off trying to pay off the existing mortgage as soon as possible, and move on. Refinancing mortgage for the house you want to get out of doesn’t make much sense. Except if you want to keep owning that home even after moving to a different place.
2. The Math Doesn’t Work for You
Even though we are in the midst of lowest interest rates in years, the math doesn’t necessarily work for everyone. You should play with numbers to determine how much the refinance will cost you compared to how much it will save. Make sure to include the extra years of payments to your calculus — lower monthly payments are not the only thing to consider.
3. You Want to Get Out of Mortgage Sooner
If you wanna go “debt free,” you don’t want to refinance. Rather, you will want to save as much as possible to pay off the debt faster. This is not an option for everyone though — simply put a 15-year loan is harder to manage than a 30-year one. Also with a longer-term loan you can get much better terms.
4. You May Want to Keep Your Current Rate, and Pace
Chances are the rate that is offered today is better than the one you got when you bought the house. Nevertheless, after some time, you got used to the pace. At certain date in calendar you know you need to pay the bank the amount you owe. Nothing wrong with that, and if that works for you (and your family), perhaps that’s the best way for you.
On the other hand…
Again, today we have the lowest rates in years. If you need an extra cash, you should refinance your mortgage and run with it. We have many factors to thank for low interest rates, Brexit being one of them. Also the situation in the Middle East and slowdown in China also play their part. Now is the time to act with even the government kicking in with a program called the Home Affordable Refinance Plan (HARP) to help Americans reduce their monthly payments.
You should know where to start, though. The good news is that there are services that could help you save time and money by comparing multiple lenders at once. One such service is Harp-Approved.com, which has one of the biggest lender networks in the nation and what’s better is that they work with HARP lenders (government-sponsored Home Affordable Refinance Program) to provide consumers with a comprehensive set of mortgage options. Check it out and see if that’s something you could use…