Why Repeated Mortgage Refinance Doesn't Make Sense

Mortgage refinance is a relatively simple way to reduce your monthly mortgage payments and just get with a mortgage program that makes more sense for you, your lifestyle, and your finances. Many people find that they are able to refinance once and benefit from substantial savings and when they see that rates drop again they are interested in refinancing again. While it can be appealing to think about saving more money you should not be thinking about refinancing so fast! Refinancing costs money, and therefore, you may not have been able to pay off the first mortgage refinance before you are thinking of doing it again.

Don’t Lose Money Through Repeated Mortgage Refinance

Everyone is always looking for ways to save money and a mortgage refinance is a hope for saving money. The thing that you need to understand about refinancing is that the process costs money, and not just a couple dollars either! Refinancing costs thousands of dollars and it takes time for the refinance to pay for itself. In fact, it can take years after the refinance to pay for itself. For instance, many people have to wait for 40 to 63 months for their refinance to pay for itself! This isn’t a bad thing; it’s just the way it works because there are costs associated with the process.

If you went through mortgage refinance just 12 months ago and you are thinking about refinancing again you are wasting your time and your money. While interest rates might be lower again or you may not like your loan program, there is no way that your refinance has been able to pay for itself yet and the costs associated with another refinance simply are not justified. It is easy to forget about the costs that are associated with the refinance because your payments might already be lower, but it takes some time to work off the costs of the actual refinance before it makes sense to do it again.

It can be difficult when you want to save to ignore the temptation of mortgage refinance when you want to save. What you need to remember is that you aren’t actually saving anything when you repeatedly refinance. In fact, it can be likened to people who continually trade in cars that they still owe on and end up with a car that is only worth $10,000 instead of $30,000 they actually owe on it. It doesn’t make sense to continually refinance when you are digging yourself in deeper into debt and this is what you have to keep in mind.

To help avoid the temptation to continually refinance, you should only refinance when you get a really good deal. The problem that a lot of people run into is that they refinance the first time and only improve their interest rate by half or one percent and then when rates lower again they try to lower their rate again. You should only refinance when the savings of the loan justifies the cost of doing so. It can be difficult to determine this so you really need to sit down and look over the savings as well as the costs and determine if you are doing yourself any favors by refinancing at all, let alone refinancing multiple times.

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