Although refinancing a mortgage is seen as a good thing in a general sense, there are actually many details that should be considered before an individual or a business owner should think about refinancing a piece of real estate. In some cases, simply refinancing without learning these details can actually be bad financial advice. Below are a few things that Burlington home owners should consider before they pull the trigger on a transaction that large and final.
For the most part, a good refinancing deal will help the long term financial record of a home owner. However, the home owner must be able to keep up with the new payments. Also, creating a time frame that is too long can actually lower the long term credit score of a borrower if the probability of paying back the loan decreases within the mind of the computer that is doing the calculation.
2. What is the refinancing for?
Are you using refinancing in order to free up capital in order to start a business? Perhaps you are trying to extend your home. Maybe you need more money for school. However, you should understand if the finances that will change around be enough for your new endeavor.
3. What are the short term ramifications of refinancing?
There are short term financial burdens that a borrower must take on in order to refinance. Perhaps the most debilitating is the lump sum fee that will most likely be incurred when the refinancing takes place. If this short term payment places a burden on the home owner, then it might benefit the person to wait until he or she does not have to borrow the money to pay that fee.
4. What is the macroeconomic condition and is there a better time to refinance?
There are buyer’s markets as well as seller’s markets in the market for refinancing and simply by waiting a few months a home owner may actually receive a better deal from a bank.
via http://michaelblanchard.benchmark.us/2013/09/17/what-burlington-home-owners-should-know-before-refinancing-their-mortgage/
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