You can get a chance to refinance your home if you have a stable job that pays $23,000 a year and a good credit history. Find out what the pros and cons of another loan are to get a better deal.
Are you ready to get a new loan on your house?
People would be better off using the equity in their homes to invest in other things than refinancing their homes to pay off bad credit card debts. There are scary stories about people losing their homes because they borrowed money for silly reasons. No matter how bad things seem right now, you should never use your home as equity.
If you haven't read the fine print, learned from your past mistakes, and found a better deal, then you are not ready for a new loan.
A warning to everyone: getting a home refinance to pay off credit card debts and other debts won't guarantee that you can get out of your financial mess. If you don't stick to a strict budget for years, you can make it. If you can't, then the loan wasn't worth the trouble.
Should you get a new loan?
Look at why you want to refinance your home. There is no reason to put your future and the future of your family in danger.
Before you decide to get a loan, ask yourself these questions:
Is it a good idea to use the equity in my house to pay off my bad credit card debts?
- How much will the monthly payment be less than it is now?
Will I continue to live in this house after I refinance it?
How much is it going to cost?
- How much does it cost?
- What could go wrong?
- Will we be able to handle a different way of life?
Things to think about
Focus on your small home instead of fancy homes that are way out of your price range. It's a waste of money to buy one of those fancy homes just to lose it in a foreclosure. Be realistic.
Like with your last loan, keep looking into the variable rates because they can be hard to understand. Be wary of loans with interest rates that are too low for the first few months. You'll have to pay more, which is not what you want.
Don't get a new loan from the same company. Instead, talk to the lender about lowering your payments on the loan you already have. Don't let them push you into getting a new loan. There will be costs you don't know about, a higher interest rate, or expensive closing costs.
If you go to a different company, try to get a rate that is 2% lower than the one you have now. The question here isn't just about the 2% lower rate, but when will you break even? If not, the whole thing will be pointless.
Don't go through it.
It should help to know how to deal with lending companies. Some borrowers let themselves be talked into bad deals because they are afraid their loans won't be approved.
A word of advice, though: once you get the loan, stop going on shopping sprees with your credit card, or your nightmare will start. Refinancing your home should help you have a stable financial future, not throw you into a financial whirlpool.
Now you need to decide if you're ready for another loan.
