Refinancing a home may seem like the perfect solution for reducing one’s mortgage payments. But it isn’t always the best financial decision. The question is then, how do you know when it is a wise decision to refinance and when it is not?
Mortgage companies can explain all of the ins and outs of refinancing, helping to make each expectation clear and methodical. Many people use refinancing to reduce their mortgage’s interest rate. However, that often means extending the loan for a longer period of time. Smaller monthly payments don’t necessarily mean the overall cost goes down.
Weighing the costs and benefits will help you make an informed refinancing decision. Mortgage companies require a closing cost in order to refinance. Be sure the closing cost is not more than what refinancing will save you over the rest of the time you are living in the house. Generally, the longer you continue to live in a house, the more likely refinancing may be a good idea.
Another rule of thumb is to only refinance once. Closing costs add up and can cost homeowners more than they could save through a refinance.
Taking all of these things into account is imperative before making any refinancing decisions. Although it may seem like a grand solution, it is not right for every homeowner. Be sure to reach out to your Castle & Cooke Mortgage professional and examine your own financial situation so you can make a well-informed decision.
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