Most of us probably have a mortgage and with rising rates all over the place, you may be considering a refinance of your mortgage. While that can definitely be a solution at certain times and for certain people, it can also be a bad move. Let’s take a look at the pros and cons before you begin to refinance your mortgage.

Refinance Your Mortgage –

Pros

  • You can save money

The first obvious benefit in a refinance is that it saves you money. If you do it at the right time and in the right way, you can succeed in cutting quite a bit from your total. This can be achieved by switching to a place with lower interest, or just opting for refinance at your current provider.

  • You can increase flexibility

Among refinance options, you can choose to switch your entire loan or just a part of it. This can give you more financial flexibility or help you out if you need more money for home, to pay off school tuition, extensive remodelling, etc. You can also take out a line of credit. Of course, if you don’t have the discipline to clear your balance, then reducing flexibility can also be a beneficial outcome.

  • You can reduce risk

Risk can be avoided or reduced if you opt for a fixed rate. Especially when you witness multiple increases in interest, this may very well be a cause for concern. If this is your reason for refinance, do make sure to take a good look at all of your options, so you don’t get stuck in a situation you can’t get out of.

Cons

  • You can wind up paying more

The thing with mortgage refinance is that it is sensitive to timing. You have to be at the right moment in time. For example, if you have already been paying for decades, switching to a seemingly lower rate now will only increase your overall repayment sum and drag the mortgage out for a few more years. Is it worth it?

  • You can switch to a worse provider

Lower rates can be extremely attractive, but you also have to consider who your provider is. How long have they been in business? Do they have good reviews? Has anyone recommended them? Make sure to do your research before switching to someplace else, because you might end up with someone who doesn’t look out for your interests at all. That’s a shame, especially if you’ve enjoyed a good relationship with your current provider.