Four Persons Who Shouldn’t Go for Mortgage Refinancing
Posted on December 15, 2009 in the mortgage refinance category
Four Persons Who Shouldn’t Go for Mortgage Refinancing
Are you 100%PRCTG% sure about mortgage refinancing?
Even though a lot of people nowadays are doing it, it does not necessarily mean that it is the right option for you. Refinancing is a huge step, and there are instances where it does not apply, even though it seems like a good idea the first time you hear it.
Think twice about mortgage refinancing if you can relate to one of these people:
Mr. A’s home equity value has dropped.
Mr. A. is thinking hard about the status of his home’s value. Property values across the nation has gone down, so in most cases it does not make much sense to refinance.
Say that Mr. A gets to refinance up to 75%PRCTG% of his property’s new value, he should check to see if his original mortgage is less than that. If it’s higher, chances are he won’t be able to pay the existing loan with his new terms. Mortgage refinancing wouldn’t be helping him at all, if you think about it.
Mr. B will be paying his first loan for a long time.
Let’s say Mr. B has an existing mortgage that he has agreed to pay for 30 years. He has been paying that for 20 years now. Good. So he should think really hard before getting another 30-year loan.
For him, another thirty years would mean another reaping of interests. Add to that the obvious costs of closing up a new loan. Once he has done the numbers, it will be clear that he would be paying more in total if he decides to go with it.
Mr. C. only has a few years to go on his existing loan.
Sure, Mr. C may need the cash now, but is it really that grave for him that he needs to get another loan for it? If he only has a few years left in his current one, might as well bear it out and be done with it. Remember, a new loan means he’ll be paying a lot more money in the end.
Mr. C should think of other cash flow alternatives that will not put his home at risk and put him in a money losing deal in the long run.
Mr. D has already used enough equity on your first loan.
Lets’ say that Mr. D took out a home equity loan of 90%PRCTG% of his home value. Mortgage refinancing might not be for him right now, because good rates for lower loans that that is rare to nonexistent.
When he refinances a 90%PRCTG% or higher loan, he probably needs a loan equal to it or higher. This is now almost a 100%PRCTG% financing option and the rates will be noticeably higher. 100%PRCTG% loans are pretty much hard to find these days anyway.
The lowdown is this: refinancing less than 90%PRCTG% will yield him bad rates, while over 90%PRCTG% will give him higher rates or none at all. Either way is shaky ground, so mortgage refinancing might not be the best option for Mr. D.
Under the right circumstances, mortgage refinancing is a good option. But if you find yourself in similar places as one or two of these people, it is better to re-assess and find other ways to get money and/or solve your mortgage concerns. In the end it is best to see, shop and compare what rates are out there, so you can decide for yourself what to do next.
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25 Responses to “Four Persons Who Shouldn’t Go for Mortgage Refinancing”
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Great information! Thank you very much for sharing this!
Thanks for this advice. It is definitely important to shop and compare prices on anything, but especially on something as important as a mortgage.
Good article, one point to add is that when a person is considering financing that they take into consideration interest rates. Even small changes in interest rates can mean hundreds of dollars more a payment.
In the world that we lives today, we should compare anything before buying it. Thanks for the article.
It really pays to shop around for your mortgage, given the current real estate market conditions and the city financial situation, you can save big just by being more selective. Nice information.
Nice informations ! i saw at news the Mortgage houses are started to selling europe countiries.
I am so pleased that he is being recognised for his brilliance in this way. You deserve it all my friend.Thanks for everything.
Good info, but I would add consideration of today’s and tomorrow’s economy. One also has take in consideration lesser stability of personal income. What is this equity loan is for? I think that should be the first question. Any refinancing, in essence will only extend interest payments. Is economy getting better? No. Will it get better? No indicators. Will we pay more taxes? Yes, with all the greening stuff. So, what’s the point to give your hard-earned cash to the banks? No point. Unless you are desperate for lower payments.
You have made an awesome attempt and is doing consistanty good.
Thanks
i thingk they must consider about intrest rate.
thanks for your article, very intresting and good information for me.
I don’t believe in refinancing unless it’s for a new house and you have to. For home improvements it’s far better to save until you have enough to buy what you want. Gives you a really great feeling as well!
Good article – traditionally your home was a reliable source of capital but not any more! Refinancing is definitely not as attractive as it was a few years ago. Like Jeff says above, it’s incredibly important to take interest rates into account – especially long-term – so you know you can at least afford the repayments.
Thanks for the detailed information…. from the title itself shows it all
I think it is going to be tough for most to refinance at this point since most are upside down on their homes..
Nicely written…is there a good source to find statistical data on the how many re fi’s were done in 2009(state by state or nationwide numbers) vs. the boom of 2002 – 2007?
I fully understand it, reviewing four times actually i understood about the four people you are trying to make us to understand about. Thanks
This is a really nice post. Very much informative. Thanks for posting this! I am glad I read this article.
Great Info.
I always have our clients at least get three proposals. Its amazing how some are completely different.
informative writing. thanks
Thanks for this information. Now I learned the who shouldn’t go for mortgage refinancing. I hope others would also read this post.
Thanks for this information. Now I learned who shouldn’t go for mortgage refinancing. I hope others would also read this post.
Thanks for good advice. Its a really useful tips.
Thanks for sharing- hopefully rates stay low through spring.
I am sure that i will come back to your blog. Well written articles !
Good article, keep us posting, you are good writer.