Larry
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Although most financial advisors recommend against refinancing, some situations exist where it is beneficial and sometimes, depending on the individual situation, there is no other way to stay above water. The first thing to consider when planning on refinancing is whether you really need it or not. If you will not be able to lower your APR by at least two points, then you don’t need to refinance. You also need to look at how long it will take to recover the costs of the refinancing. If refinancing is only going to save you $100 per month, and you have $2000 in up-front closing costs, it will take 20 months to break even from the refinancing. If you plan on moving in that period, it doesn’t make sense to refinance.
Besides the APR, you also have to look at the term length and type of rate. If the refinancing is not going to affect the APR and will only lower your payments by extending the term length, you will be paying more overall. Increasing the term length of any loan is never advisable. If you are being offered a lower interest rate, you need to consider if the rate is adjustable or fixed. A fixed-rate loan is the only one should ever accept. Adjustable-rate loans look attractive, at first, but after a few years, the rates are going to dramatically rise, along with your monthly payment.
If you think refinancing is going to help you, shop around for a deal. Don’t just ask your current loan provider or bank. See what another bank can do for you. You should visit at least five different banks to get an idea of what is available.
 Posted 5402 day ago
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