The Truth Behind Common Mortgage Refinancing Myths

It is important that you do not buy into some mortgage refinancing myths. If you do, it could cost you some serious savings. If recently the people you know are rushing to refinance a mortgage, there is an actual reason behind the decision. Mortgage rates have taken a plunge over recent months and it is highly recommended to grab a great rate. However, if you are still hesitant about refinancing your mortgage, it may be because you have bought into some of these mortgage refinancing myths below.

Resetting the Clock on Your Loan

Most people do not wish to refinance because they do not want the clock on their mortgages to be reset. If you are already several years into your loan, you might feel the same way too. You may think that after having paid 10 years of loan with 20 years left, you will be left to start from scratch all over again. This is not necessarily the case. Some lenders are able to grant you a much shorter mortgage depending on the timeframe that you are comfortable with. In addition, you may even be able to refinance to a loan with a shorter term but still remain affordable.

Lower Your Home Equity

Some people have the perception that they may lose out on their home equity that has been built over time if they refinance. However, that is only possible if you perform a cash-out refinance which involves borrowing more than the balance of your current mortgage. If you just focus on refinancing your balance without adding to it, your home equity will not be affected.

Waiting a Year Before Refinancing

If you have just refinanced recently, you might be assuming that it is still too soon and you need to wait out until about a year before you will be able to refinance again. However, this is not the case as the minimum period you need to wait after refinancing is just for six months. Having mentioned that, you have to take note that each time you refinance, you will be hit with closing costs. Hence, refinancing too frequently is also not really advisable. However, if you really need to refinance because of improved credit score or wanting to secure better rates, then by all means, you should do it.

Closing Costs are Non-Negotiable

The downside of refinancing is having to pay closing costs before you can get that new loan. However, do not assume that those closing costs cannot be reduced. There may be certain costs which you cannot negotiate such as government-set recording fees, but application and loan origination fees can still be negotiated with the lenders.

Every Situation Differs

If you are still contemplating whether you should refinance, always obtain as much information as possible to support your decision-making process. Sometimes, it is best to wait it out but on certain occasions, refinancing may offer greater gains for your situation. Depending on your individual needs, taking action today may prove to be highly beneficial. At other times, you need to take things slow.

Related Posts

Conventional Loans Aren’t Just for Our Parents; A message to millennials from a millennial Generation gaps were first brought to light in the 1960’s. These generation gaps can make it difficult for even those in the same family to understand each other. Take for example, millennials waiting to start families, whereas their parents were married, […]

Mortgage interest rates have been at historic lows, causing many to look into a refinance of their mortgage, and given the recent market conditions we cannot be certain how long this trend will continue. If you would like more information on why we have seen shifting interest rates, check out this related blog post. There […]

A bankruptcy will eliminate debts but can also leave your credit in kind of a rough state. But following a bankruptcy, what should you be concerned with? And how long do you need to wait before considering owning a home? Typically, when it comes to concerns about purchasing a home, often people find themselves worried […]

Private Mortgage Insurance (PMI) lowers the risk to the lender, should you default on your mortgage payments. Please note that PMI does not benefit you, the borrower, but instead protects the lender with whom you are getting the mortgage. PMI is often required with loans that carry a lower down payment. In fact, because of […]

With just $500 dollars, you can make a huge difference in your home with some upgrades. These upgrades can increase the attention of your house if you’re planning to sell, or they may help modernize your home without going through a major renovation. Below are some of the upgrades you can do on a budget. […]

Cleaning isn’t glamourous, but someone must do it, right? We’ve rounded up a couple of tips and tricks to help you make the most of your next cleaning spree around the house.   Tip 1: Create a cleaning schedule- this will help to reduce or eliminate the stress you feel about cleaning. Create your schedule […]