Posted 2.20.13 @ 10:30
Have you seen those commercials lately that advertise that they can refinance it to “all time lows”, even if you’ve recently refinanced your home? Of course you have, and they make it sound so good you may feel like you don’t have anything to lose. The sad fact about mortgage refinance is that it really can destroy your credit if you do it too much or at the wrong time. There’s a whole host of rules of how this all goes, and here we’re going to go over them so you can protect yourself and your credit. Let’s get started!
Is a Couple of Interest Points Really Worth It?
Yes, over the life of your loan you can easily save thousands of dollars (at least a 25 year mortgage), but you’re going to probably have to pay much more in origination and closing fees – do you really want to spend more than you have to? Instead of ending up with a mortgage that’s not doing anything for you, you’ll want to be careful about refinancing. Talk with your mortgage broker, talk to your realtor if you’re refinancing with a bridge mortgage, and talk to a financial advisor or planner to really know if it’s worth it.
You Just Bought a Home
You just bought a home but you’re not happy with the rate you’re getting. That 1% could really make a difference right….? No. Don’t do it – if you’ve bought a home in the last 18 months you’re not going to see a significant savings and you’re still probably hurting from the fees from your last origination! Why are you going to hurt yourself more and get dinged credit when you can do so much more? Keep paying, wait until there’s a better time before you have to do this. Don’t get stuck with more fees and bad terms that aren’t going to work out?
You Just Refinanced Less than 36 Months Ago
If you just refinanced within the last three years, it may send off alarm bells when bankers and other lenders look at your application. Oh, this borrower can’t keep their hands on their equity. They keep leveraging their real estate (luxury real estate or otherwise) with more and more mortgages and debt. You don’t want to end up with the reputation as a borrower that can’t handle your debts, but if you keep refinancing and refinancing it’ll get to the point where no one will lend you money for whatever equity you offer them. Don’t get stuck in this situation.
When it comes to your real estate and equity you need to be careful – but you also need to be careful about your credit. Just because you have equity doesn’t mean you’ll be able to use it. Be very careful about lines of credit and loans you apply for, choose wisely, spend even more wisely. That way you’ll be able to make the most of what you have for years to come.