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Mortgage Tips - Refinancing Your Current Mortgage
There are two situations I think people should be careful of:
- Thinking that because their renewal date is not here yet, they cannot take advantage of interest rates which are currently very low.
- Getting into other debt, re-financing their mortgage to consolidate it, while not making the budgetary changes to prevent them from accumulating that debt again.
When is the right time to renew?
When interests rates are very low, it may make sense to renew early even though there is most likely a penalty for doing so. I had a lawyer tell me once that he was not considering renewing early, as the penalty for doing so would be approximately $8000.00. Since his interest rate was high ( 8.5%), I did some calculations for him, to show how he could roll that penalty amount into the mortgage, and save about $20,000.00 by doing so.
There is no pat answer as to when is best to re-finance your mortgage. It is better checked, and only takes a few minutes to do so. Neglecting to check it out could lose you the opportunity to save big dollars, and prevent you from enjoying extended protection from higher interest rates. Call me and we can check it with no obligation to you.
What cautions should we heed when re-financing to consolidate debt?
The accumulate debt, re-finance, accumulate debt recycle program is not environmentally friendly. If the spending habits that got you into debt go unchecked, you may end up repeatedly paying off your debts by re-financing your mortgage. As you get older, of course, you want to own more and more of your home. Consolidating debts through new mortgages may lead you to still owe a great deal on your home when you are coming close to the end of your best earning years.
The caution here is that while re-financing the mortgage can be the right tool to consolidate debts and get away from the 18% interest rates on some credit cards, it is a tool which must be used judiciously.
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