To refinance or not to refinance

To refinance or not to refinance

financing your homeThe bills are piling up and you’re not getting any sleep. You’re up all night sorting through paperwork, trying to keep your family afloat. Between financial woes, your job and three kids, you’re at your wit’s end. You have no idea how you get up in the morning or how you’re still standing, but you persevere, because that’s what people do nowadays. However, you do need some help. Just a little. Your one friend suggests you refinance your home. It sounds like a good idea, but like Hamlet, you’re struggling with the question, To refinance or not to refinance


Refinancing is the replacement of an existing debt obligation with a debt obligation under different terms. Think of it this way: you sign a contract for a service and pay a certain amount each month. Eventually though, due to unforeseen factors, the amount becomes too much and you have to restructure the contract. By restructuring this contract, you’re able to pay a different amount each month.

In an unpredictable local and global economy, many people consider refinancing as a way to bring a greater sense of stability to their lives, to lessen the burden of financial distress. Many people across the country are refinancing their homes. As with everything in life, there are pros and cons to refinancing.

What refinancing accomplishes is the following: lowers the interest rate on a mortgage, reduces the length of a loan, helps to consolidate debt and much, much more. These things can save a person and family thousands upon thousands of dollars. Between lower interest rates and a better loan period, a family can begin to get back on its feet.

Refinancing is not something you should do on the fly. You need a solid game plan. Considering the main goal of refinancing is to bring more financial stability, you want to make sure the cards are stacked in your favor. Ask yourself the following question: is my current monthly mortgage payment too much to handle? If the answer’s yes, your next step is to consider the different refinancing options, such as extending the loan or switching from an ARM to a fixed-rate mortgage, all while comparing rates from lenders.

Your homework doesn’t stop there, as you should look into your credit score and the property value of your home. Everyone should have an idea of his or her credit score. Surprisingly, many people don’t. We live in a world of plastic, a world of credit. To stay afloat, it is imperative that you have good, or decent, credit. It will help make the refinancing process a smooth one.

Refinancing isn’t an easy choice. It shouldn’t be. If you have any questions, or struggling with the question, To refinance or not to refinance, contact the professionals at River City Financial.

*Image courtesy of alexskopje

Post by Yvonne Wilchewski

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