Should I Refinance

I kept seeing advertisements for refinancing deals, and I kept getting marketing calls. At some point, it began to get to me. Should I refinance, I began to wonder.

The promise of a refinancing deal of course is that it will end up saving you a lot of money. But I did wonder – what if not everything is as advertised?

As I began to read up about it, I begin to discover soon enough what kinds of things could go wrong. I began to learn that it was always a question of should I refinance given my circumstances. While refinancing deals are a good idea basically, you always do need to check whether they might be a good idea for you personally.

For instance, any refinancing deal comes with costs attached. The attraction of a refinancing deal is that you get a lower interest rate. If the costs attached happen to be high though, you'll find that it completely cancels out whatever benefit you might get from the lower interest rate. In fact, you mustn't be surprised to see that you actually lose money when you get a deal like this.

Basically, a refinancing deal is about getting a new loan and interest rate that's lower than what you're currently paying for your home, using the money to pay off your first mortgage, and then continuing with the new one.

A refinancing deal is usually far easier to come by than a home loan. When it's a home loan, you don't own anything. When it's a refinancing deal, you have this house and equity in it to offer the lender. These deals are a lot less risky for the lender; that's why there are so many of these authors. There looking to make some easy money.

The costs attached to a refinancing deal for many. In fact, there are as many of these costs and fees and a refinancing deal is there are in a first mortgage. There are closing costs, there's attorney's fees, title insurance, transfer fees – the whole lot. They have to pay all these things even when they advertise no-cost mortgages.

And then, if you go and ask for the lowest interest rate, they make you pay the highest cost. For each .25% that he asks to lower the interest rate, you pay about $1000 extra in closing costs.

The "should I refinance" question needs to be answered this way. If you are offered a lower interest rate, total up all the costs you're paying, and find out how long it'll take you to break even when you compare your costs to want to save every month. If it doesn't take more than a couple of years, it could be worth it.