To Refi Or Not to Refi?
Why refi? No-brainer here. Getting better terms on a loan may lower your monthly payments, and can get you out debt faster. Why isn’t the problem. What is? Well, not all loans refi the same way. Some, the process goes easy. Some take a little work.
1. Credit Cards. To refi a credit card, just get a new one with a lower rate, then transfer your balance over. Simple, right? Not so fast. Some credit card companies tempt you with those 0% promo offers, but charge fees for the transfer, and the interest rate may skyrocket after the promo period ends. The better move is transferring to a card with a low rate, period. Say, one of ours.
2. Car Loans. Too bad payments don’t go down automatically as your car loses value. A refi can even things out, saving you hundreds a year by reducing the interest rate on the loan. You do have to apply, but it doesn’t take long and some places even pay you to refi!
3. Home Loans. Remember all that paperwork when you first bought your home? Refinancing is déjà vu all over again. Expect lots of documentation like before, appraisal and closing, and, yes, closing costs. Shop around first. Rates vary, and your current lender may not have the lowest.
4. Student Loans. Got a Federal loan? Answer yes, then you’re probably better off sticking with it. Rates are pretty low to begin with, and by refinancing, you may lose all those government breaks, like the chance for debt forgiveness. Refi a private loan, and lots of options pop up from a Google search. Only a word of caution here. Okay, three words: do your homework. Squint your eyes and read the fine print!
One last question: What’s your credit score? A good score – especially a solid track record of paying bills on time – makes lenders much more willing to deal. Good luck!
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