Ever since interest rates hit all-time lows during the years following the 2008 recession, they have been slowly increasing over the past few years. Before these rates get too high again, you may be tempted to refinance your home. While the idea of tapping into the equity that you've built up or lowering your mortgage payment may motivate you to do so, there are some reasons that you shouldn't refinance your home as well.
You may want to reconsider refinancing your home if your plan is simply to pay off the credit card debt that you owe. While it may seem ideal to do a cash-out refinance to receive funds in excess of what's due on your home to pay off your high-interest debts in exchange for a lower rate, it can result in a higher mortgage payment. If you can't remain current in paying it off, then you could lose your home.
If your reason for wanting to refinance your home has to do with you wanting to buy bonds, invest in the stock market or a desire to purchase other assets, then you may want to reconsider your choice. While these may be effective ways for you to grow your wealth, you have to keep in mind that you're potentially risking it all to invest in those things.
Individuals often decide to do a cash-out refinance of their home so that they can remodel it, get new appliances or perform some other type of home improvement. While refinancing your home can be an effective way for you to do this, it's important that the renovations that you plan to make will enhance your house's value instead of simply improving its aesthetics.
While many Augusta homeowners may be motivated to refinance their homes in order to shave off a few hundred dollars off their mortgage payment each month, closing costs may leave them seeing little change in the short-term after they do so. A refinancing attorney who has built their reputation on being a trusted legal counsel for real estate matters can help you decide whether this is the right option.