Downside of Refinancing: What Lenders Don’t Tell You
Does refinancing work? Will it resolve the financial issues you’re having? The truth is this, refinancing without good financial planning cannot make a lasting change in your financial situation—it is only a temporary solution. First, let me tell you what refinancing can do. Refinancing can help you consolidate your debts, save on interests, invest into something that would bring good profits and pay for anything that you need. That’s exactly what every borrower struggling with multiple debts and bad credit look for, right? Well, perhaps it is but without a plan, that alone won’t save your finances from going downhill. What will save your finances from going into a spiral of debt? It’s your 100% commitment to change your money habits.
Now, let’s try answering this question again, “does refinancing work”?
Refinancing helps you:
- Cash out for your daily expenses
- Consolidate debt
- Get manageable loan payments
- Pay for emergency expenses
- Pay off your loan as quickly as possible
- Take advantage of better loan rates
Refinancing without commitment to change your money management habits will not work. That’s the downside of refinancing. It will only work if you use it to change the way you view money. The problem with some people is that they are not willing to change the way they handle their finances and do the hard work of rebuilding their credit. Typically, the commitment level of a borrower fades as the debt level decreases. Furthermore, some people only apply for refinancing as a way of addressing current financial problems.
The most important benefit of refinancing: Savings
If you decide to refinance your home to take advantage of a lower interest rate which is lower than the current rate of your mortgage, you can save more on your monthly payment. Even a decrease of 1 percent in interest rate can drastically lower the principal and interest.
If you want to save thousands on loan interests, use a portion of your refinancing proceeds to clear all your debts. You can also try negotiating with your creditors and credit card providers to lower your Annual Percentage Rate (APR) when you pay in cash. Simply put—refinancing is a costly loan, so use the money wisely by not leaving a chunk of loan unpaid.
Need help with refinancing?
Refinancing is a time-consuming process—that’s another downside of refinancing that lenders won’t tell you about. There are many documents required and it is difficult for borrowers with bad credit and unstable income to get approved. Some lenders also take around three months before they approve the refinancing application. Generally speaking, lenders consider it risky to lend money to people with no stable income and a good credit history. If you haven’t had a ‘Home Loan Health Check’ in the past twelve months and you want a no obligation offer, NSW Mortgage Corp is the right company to help you. You can get the most competitive interest rates and save thousands of dollars as you get the refinancing product that best matches your needs.