In refinancing, timing is everything. If you apply for a refi hastily, you might realize that its costs outweigh its savings. If you do a little later, you might have wished to leave you old mortgage untouched.
Of course, everyone wants to save in interest over time and even access cold cash when the need arises. It’s not a silver bullet, however, that could fix your less than desirable financial situation at all times. Altius Mortgage Group and other mortgage refinance providers in Utah, Colorado, and California says that this might work against you in many cases when executed at the wrong time.
Resetting the Clock Might Cost You More
If you refinance your loan and get the same term, you run the risk of merely extending your repayments. For instance, if you have already done paying your 30-year mortgage for 48 months and decide to start all over again with a new 30-year mortgage, you might end up paying the loan on your property for 34 years. Of course, there’s more to this situation. That’s why you must mind the refinanced rate and term to see if you’re truly saving money down the road.
Refinancing Serially Might Not Recoup Closing Costs
Serial refinancing is a practice of applying for a refi a number of times to constantly snag and lock in a lower rate. Unless you apply for a no-cost loan, refinancing before the break-even period ends might not validate your payment for the fees you incurred at closing in your previous refi.
Restarting Your Mortgage Might Increase Your Interest Expenses
When you refinance at the latter stage of your current mortgage, you might pay more interest overall if you start all over again. Understand that most of your early repayments go to the interest, and you would only cut down your principal balance somewhere in the middle of the term.
Until you’re financially capable of taking out a shorter term and a seriously low rate, it doesn’t make sense to refinance and throw the majority of your money toward paying interest again.
A favorable refi deal for one borrower may not necessarily advantageous to you. It’s important to take a close look at where you stand financially, see your progress on your current mortgage, and analyze the refis at your disposal before you make a decision.