Should I Refinance?

Refinancing could help you or hurt you. Here are six questions  to ask before deciding to refinance.

1. Will I qualify for the rate I’m looking for?
This all depends, between your credit score, the type of refinancing you are looking for, will determine what interest rate you will qualify for.  Search around and get quotes from a few lenders, but be careful, some may quote you just about anything to get your business. You may want to check with the lender who you financed your original mortgage with if they are someone you trust.  If you can’t qualify for the rate you want, you may not want to waste your time refinancing.

2. How do I make sure I don’t go from a good loan to a bad loan?
If you haven’t done your research, and are easily talked into things, or aren’t great with making solid financial decisions, refinancing may not be the way you should go.  If you are already satisfied with your current loan, you may just want to stick with it, if you aren’t satisfied, you may not want to chance refinancing only to end up with another bad loan.  Also you do run the risk of a lender offering you one rate on your quote, and then when its time to sign actual paperwork changing their story.

3. Will refinancing help me come out ahead?
Predicting whether or not you will come out ahead in a refinance can be tricky to determine.  There are several factors that can come into play.  You may relocate, a natural disaster may occur, any number of unexpected events could happen that could make refinancing not in your best interest. It depends on whether or not you can afford that risk. So consider this carefully in your decision making.

4. Do I have enough free time to spend refinancing?
Depending on the demands on your time, having the time to research and carefully weigh out your options for refinance is crucial.  If you don’t have the time to carefully consider a new finance plan, it may not be a good time to make a wise decision about your mortgage.  Wait until you have time to spare and prepare when concerning refinancing your home.

5. Do I have the control to not roll other debt into my mortgage?
It may sound like a great idea to consolidate your debts for one monthly payment instead of several at the same interest rate. Look at these kinds of opportunities carefully.  Do the math, even though your payments may be lower monthly, stretched out over a longer length of time may result in you paying more once interest is added in.

6. Lending standards have become more strict, will I qualify?
Demands for more information to determine if you qualify have become more strict. You may be required to have a higher credit score than the first time you financed a mortgage, and additionally be required to provide detailed financial records such as pay stubs, bank statements, your most recent tax return as well as other proof of financial stability.

These are all things you should carefully consider when thinking about refinancing.

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