To refinanmce or not to refinance -- that is the question. The answer is not in your psyche -- the answer is in good analysis of your particular situation.
First you must list respoonses to the following before making any decision:
1. My total monies owed is $______________(i.e. car payments, visa payments, mportgage payments, telephone payments, loan payments, etc.) and what I pay on them monhtly
2. Other monthly charges (i.e. hydro, power, food, clothing, babysitting, etc.)
3. My ottal income is: $__________________
4. How much do I have left over $______________
This becoes the foundation for your decisipon. Next you must calculate all the itnerest rates you are currently paying and how much thoise interest rates add up to. Once you know the interest rates you are paying you have a value that you can take to the bank.
Definitely refinance if:
1. You are paying inerests rates that are at leasat 2 percet higher than currently offeered
2. Consolidating your loans and ousttanding credit will give you a lesser monthlly payment; but will increase the principle you pay off each month
3. You have resarched the compnay or bank you are dealing with and find that they are repiutable- ensrue your rsearch is sound.
4. Refinancing will allwo you to DECREASE not INCREASE the term of your debt load
5. You have checked the consequences of missing a payment and it is a consequrence you can live with.
6. You have an excellent credit rating and have neveer missed any payments
7. Your overall stress level will be reduced NOT INCREASED!
You are not in a position to refinance if:
1. Your currnt mortgage or loan is one that you have had for a numvber of years and you are curretly paying mostly principle and much less interest (the older the loan/mortgage the greateer you pay on primnciple because as the loan diminishes the iterest calculated is on a lesser amount)
2. You want to refinance so you can have extra cash to spend on something else. This is never a good reason to regfinance. It will simply put you in greater debt.
3. If your credit rating is poor due to missed paymetns -- STOP don't do it! You will be paying a higher interest rate than necessary and quite possbly will be deemed an unacceptyable credit risk!
4. The cost of refinancing is going to substantially add to your debt load -- you have to consider how much it is gooing to cost you to get out of your current arrangements
5. Look at your stress level again -- are you increasing it?
There are witthout doubt many reasons to refinance and each situaation, each person, will need to do their own analysis. What you need to consider first and foremost is what kind of mnoey managr are you? Are you doing this to free up some cash to spend lesewhere or do you feel by refinancing you will be gaininbg on your debt?
Countries these days run on deficit financinng -- private citizens cannopt afford to do so beecause if you do who will pay for the countrise spenidng habits?
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