The offer of refinancing is considered by many due to the advantages therein. Credit card loans can be consolidated and you need not focus on various repayment schedules as all your debts are merged into a single one. The monthly payments are also significantly reduced enabling you to save a significant amount of money which could be invested in promising plans. With good credit history you can get refinancing loan for very reasonable interest rate and bring your monthly expenses towards your debts under control. The term of the loan is a very important factor as you might take a very long time for you to clear your debts. This might lead you to pay more towards the interest. Those with bad credit score cannot expect to get refinancing loan for lower interest rates. However, the offer is not denied for poor credit borrowers. The stretching of loan term has negative impact on the credit ratings. Future financial planning is also limited when your loan term is extended through refinancing mortgage.
There are closing costs, application charges and loan origination fees besides credit report charges which are additional burden for you. The penalties are heavy on mortgage refinancing loans.
When you refinance the existing mortgage, you take longer time to be totally free of debts. Analyzing your financial requirements and your affordability to repay, you can understand whether you really need to refinance the existing mortgage. However, it is a right choice to refinance if there is a dropdown in the market interest rate on home mortgages. In such an event, you can opt to go for a mortgage with a lower loan term so that the loan is cleared faster and you become free of debts at the earliest.
