Is refinancing a mortgage bad?

Answer 1

Refinancing a mortgage is generally a good thing because you usually refinance to get a lower interest rate which will lower your monthly payment or if you are combining several high rate loans into a lower rate loan. But you should try to stay away from cashing out money - this just makes it take that much longer to payoff a mortgage.

The average person moves every 7 years so if you are not planing to stay in your house for a while, it generally doesn't pay to refiance.

Remember that if you refiance into a new 30 year mortgage then it will take 30 years before the mortgage is paid off; if you don't pay extra each month. If you presently have 10 years paid-off on the mortgage and it pays to refinance, then look at the option of a 20 year mortgage.

The general rule of thumb is that you shouldn't refiance unless the new rate is 1 piont lower on $100,000 borrowed. But you should talk to the bank (or where-ever you are thinking about getting refianced) and they can run the numbers for you. They can show you what your new monthly payment, total payment, and all cost will be.

Refinancing a mortgage is not a good or bad thing at all, it generally is situation motivated. Without knowing why you are refinancing or thinking about refinancing it is difficult to advise you.

Refinancing is bad when your new loan rate is higher than the original loan rate because that means that you will have to pay more for the money you've borrowed. Many people had to refinance because they were in a variable rate mortgage and when the interest rates moved up, their loan got more expensive because their interest rate moved up as well. So they refinanced to a fixed rate which was probably higher than if they had gotten a fixed rate in the first place plus they had to pay a refiancing fee (cost). But making the mortgage into a fix rate is generally safer than allowing it to fluctate.

2) Refinancing can be bad if your closing or refinancing cost are high. Many brokers make their money on the high refinancing cost. Make sure to compare this cost.

3) Also if you pay for point you should have the bank or broker explain the break-even point (number of years you will have to stay in your house to break-even on the extra cost of paying on the points).

There are many online sites that can give you free bids on your mortgage refiancing as a place to start.

Hope this helps.

Answer 2

First of all refinancing depends on the reason you are refinancing the property for.

#1 If you are paying off credit card debt

#2 Buying a big ticket item like a car, appliances

#3 Getting a signaficant lower interest rate than you have now

#4 Paying for childrens eduaction (Should have a better method, but if this the one you have chosen)

Then this could be a very good thing. Then there are variables that you have to think about and find out if it a good idea or would I be adding more debt.

Say for instance you have credit card debts that say total $15,000 and your are paying $500 per month on these credit card debts.

If you can get a new mortgage, pay off the credit card, debt and be debt free and to do this will not increase your mortgage by much it would be to your advantage to do this.

You would be getting rid of debt that was not tax deductable as your mortgage is and your monthly debt payments would be lower.

Now what you do with the savings is key. If you use the savings to continue spending bad idea or if you run the credit cards back up bad idea. Save the money or at least 2/3rd of it in some type of saving account, good idea and worth the refinace.

If you are refinancing to go to Las Vegas or Atlantic city or for no other reason than I just want to refinance then it is a very very bad idea.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 3

It depends what you are trying to do. If you are getting a better mortgage and pay no closing costs, then it is good. If you are paying closing costs, then you need to look carefully what is it that you are getting and how long it will take to recover those costs. Now remember some brokers will say you pay no closing costs "out of pocket" and simply add it to your mortgage balance -- do not do it. You are still paying it. Rather find a broker who will be willing to give you a slightly higher rate and cover your closing costs out of his/her commissions. In some states where closing costs are very high, they may not be able to cover your closing costs, but then it may not make much sense to refinance either. It all depends on your numbers and what are you trying to do.
So, to answer your question, if you know what you are doing -- refinance is a good thing, but it may be also harmful to your finances and you will not even notice it. Sometimes, they may refinance you, you get a lower monthly payment and yet you lose money, because the amount you owe actually went up, and the term of the loan got extended.
There is lots of scam offers that I see every day on TV and Internet, for example this Ad from Quicken Loans that offers a 100,000 loan for $350 a month – this is a negative amortization loan. You pay less than actual interest accrued and the difference gets shoved back into your principal, so you pay less for a year and then, surprise!!! You owe 10,000 more than a year ago.
Make sure you know what you are doing and don’t just look at monthly payments, look at the whole picture.

Answer 4

It depends on your plans. Since you have to pay closing costs, it is best if you are going to be in the home for a long period of time. It doesn't make sense to refinance now and dpay the costs if you are moving soon. Also, if you continue to refinance the house to a 30 year mortgage, it will take you longer and longer to pay off the house. If you have credit card debt with a big interest rate, refinancing it into your house might be a good idea.

Answer 5

on the starting up refinancing relies upon on the reason you're refinancing the valuables for. #a million at the same time as you're paying off mastercard debt #2 paying for a good fee value ticket merchandise like a motorcar, homestead equipment #3 Getting a signaficant shrink pastime fee than you've now #4 determining to purchase children eduaction (would want to have a more suitable robust effective mind-set, yet at the same time as this the only you've chosen) Then this may properly be an really sturdy element. Then there are variables that you'll be able to need to imagine of about and hit upon out if it a robust idea or would I be which include more suitable debt. Say operating celebration you've mastercard expenditures that say finished $15,000 and your are paying $500 in line with month on those mastercard expenditures. if you may get a sparkling very personal mortgage, pay off the mastercard, debt and be debt free and to attempt this isn't develop your very personal mortgage through technique of plenty it will be for your income to attempt this. you'd be getting rid of debt that replace into no longer tax deductable as your very personal mortgage is and your month-to-month debt money would properly be shrink. Now what you do with the fee savings is standard. in case you make the most of the fee savings to proceed spending undesirable idea or in case you run the credit playing playing cards decrease lower back up undesirable idea. keep the money or a minimum of two/0.33 of it in some type of saving account, sturdy idea and properly truly well worth the refinace. at the same time as you're refinancing to flow to Las Vegas or Atlantic city or for no distinct reason than I purely favor to refinance then it is an really very undesirable idea. i wish this has been of a few use to you, sturdy fulfillment. "strive against ON"

Answer 6

It can be good if you want to lower your interest rate and/or payment.

The down side is that if you're 10 years into a 30 year mortgage(leaving you with 20 years remaining before you pay off the house) and you finance for 30, then you're just adding time to how long it will be before you own the place. Most people don't actually plan to own their home forever, though, that may not be an issue unless you want to retire and live in your current home.

So you need to consider how long you intend to live someplace. If you are going to sell in a year or two, it will cost you more in fees and such to refinance than it will to pay a little more each month between now and the time you sell.

Ask the lender a lot of questions. Ask more than one lender.

Answer 7

Depends. If you get a better rate and terms, it's good.

If you keep refinancing, continuing to have a 30 year each time and never get to pay it down, not so good.

If you keep building up a ton of credit card debt and then refinancing to pay off the debt, really bad - don't get into debt.

Answer 8

No, especially not if you are refinancing from an adjustable rate to a fixed rate. I did this a year ago and it was the best move I could have made at the time.

Answer 9

No, it can be a good idea. Especially if you are saving 2 or more interest points. Or if you are going from adjustable to fixed. You can compare your savings at different rates at the website www.bankrates.com

Good luck!

Answer 10

No, not if you get a better rate or term. You just have to break out the ol' pen and paper and see if the new deal makes financial sense for you.