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City Creek Mortgage

11910 S. State Street, Suite 100, 84020, Draper, Utah

(801) 501-7950

Misconceptions about

Loan Refinancing

Same as applying for a mortgage, refinancing also involves a lot of pitfalls that

can seem like good options at first.

Depending on the mortgage rate type, the refinancing structure can also move

based on the bank index for adjustable rates. As the rates fluctuate or plummet,

a refinanced loan may turn to be costlier and inefficient than the original one.

On Frequent Refinancing

In its basic definition and purpose, a refinance enables borrowers to restructure

their outstanding loans in a manner that will fit their financial standing. However,

not many are aware that extending or cutting a loan repayment period may put

them at a higher risk of foreclosures or higher vetted interest rates.

Whether it makes good financial sense to refinance multiple times depend on

various factors. According to Ray Rodriguez, regional mortgage sales manager at

TD Bank says, “It depends on the answer to several questions: How long do you

plan to stay in the house? Do the benefits outweigh the costs?”

Refinance Specifics

The actual affront cost of refinancing is generally higher, as the repayment

period will be either extended or shortened with incrementing rates. Typically,

one of the add-on expenses unrelated to the loan is the appraisal of the title

insurance, recording fees, and additional fees charges by the valuator and the

lender.

Yahoo Finance reports, “If, for example, you pay $4,000 to refinance and cut

your payment by $200 a month, you'd need to keep the loan at least 20 months

to break even.”

The Logical Way to Pay Debts via Consolidation

The primary reason for becoming even more indebted in a refinance structuring

is that people only look at the interest rates; when the duration is what makes

all the difference. Lessening the interest rate by meager values and extending

the total repayment period isn’t a good decision — especially if the total cost will

be the same — if not higher.

RESOURCES

http://citycreekmortgage.com

http://finance.yahoo.com/news/actually-refinance-mortgage-too-often-

181651884.html

http://money.usnews.com/money/personal-finance/articles/2015/02/05/3-

reasons-to-refinance-now