If there’s one question that homeowners have on their minds right now, it’s “should you refinance your home, or just keep things the same?” Now there are reasons to refinance a home, and there are reasons not to refinance the home.
Believe it or not, one of the first things that you really need to think about when it comes to the question of refinancing your home is whether or not you plan to make it your permanent residence. If you see yourself staying there for 20 years, refinancing is definitely a good way to save money and negotiate better terms. In addition, many homeowners already know the hassle of having to take on bad terms just to get into a home. A lot of agents say that having a home is such a good value proposition that even if you have to take bad terms up front, you can always refinance.
Now, the truth is a bit different — refinancing is definitely not a slam dunk at all. That means that if you really want to get better terms, you really need to make sure that your finances are in order from front to back and side to side. You need to make sure that you not only have good credit, but you still have plenty of money on hand — you will have to pay fees in order to refinance. Out of all of the facts o n refinancing, people tend to forget this. It’s not a free opportunity at all — refinancing costs money, and you need to make sure that you can afford that part of the process. Closing isn’t as expensive as it was when you first purchased the home, but it certainly can be.
One of the other hidden things about the refinancing process is that your first mortgage might actually have a pre-payment penalty. This means that instead of being able to take care of things on your own without a fee, your lender might charge you a fee because you paid off the mortgage early — meaning that they didn’t get a chance to profit off of you as much as they assumed that they would. Hey, a lender is still in the business of making money — they aren’t just giving you the finances for a mortgage for no reason!
Still, even if you have to pay a penalty, it could still be a good thing to go ahead and refinance your home — crunch the numbers and see where you stand!