Refinancing: Should You or Shouldn’t You?
Due to a variety of circumstances, more and more people are getting deeper into debt than ever before. As a result, many are seeking alternatives for dealing with their financial problems – ways they can consolidate their debts. One way to do this is by refinancing their home.
Refinancing offers you a way to consolidate high-interest debts, like credit cards, using the equity in your home. Mortgage interest rates are half (or less) that of many credit card companies, plus you can deduct the mortgage interest you pay yearly on your income tax return.
Whether or not refinancing is right for you depends on your indebtedness and the amount of equity in your home. You’ll want to see a mortgage lender to find out exactly how much money you’ll save every month by refinancing.
Most homeowners with an adjustable rate mortgage can also benefit from refinancing into a fixed rate mortgage. Most ARM’s have a very low rate for the first one or two years, then the adjustment period begins. The adjusted rate can make a big difference in the monthly payment, so refinancing to a fixed rate can help save you money.
Again, you’ll want to consult with a mortgage professional to get the details for your specific situation. But in most circumstances it’s wise to refinance out of an ARM.