There are many reasons that Augusta homeowners consider refinancing their homes. Many individuals are motivated to do so to take advantage of low interest rates and to lower their monthly mortgage payments. While there are many valid reasons why a Georgia homeowner may want to refinance their home, there are just as many negative ones why they shouldn’t.
It’s often after the Federal Reserve System reduces interest rates that borrowers rush to refinance their mortgages. Homeowners hurry and do this because they’re concerned that the low rates won’t last. This is where mistakes happen though.
Although it may seem like time is of the essence when it comes to refinancing, that’s not necessarily the case. Interest rates seldom increase that quickly. You, as a borrower, should think about your long-term goals before deciding to move forward in refinancing your home.
If you’re looking to pick up and move within the next two years, then you may not want to refinance your mortgage. It takes up to two years before you start seeing any true reduction in your monthly mortgage costs.
You may also want to reconsider refinancing if you’re about to pay off your mortgage. You have to pay closing costs on your loan. Refinancing your home can tack on time onto your mortgage. Both of these can leave you with added costs.
Looking at the terms of your original mortgage before you decide whether to refinance is important. It may say that you have to hold onto your original mortgage for up to five years before refinancing it. You may end up having to pay prepayment penalties if you fail to do this.
You may want to reconsider refinancing your mortgage if you’re primarily doing so to deal with mounting financial woes. If you are hoping that lowering your home loan payments is going to help you get a leg up in other areas, it may not. You could put your home in jeopardy if you default in making payments.
There are many pros and cons to refinancing your mortgage. Only you know your financial situation and whether it’s the right move for you. An attorney can explore the benefits and downsides associated with renegotiating your loan and guide you through the process from start to finish if you decide to proceed with it.