Refinancing…Is It Right For You?
With interest rates hovering at all-time lows, it has created a
stampede of people who have resorted to refinancing their homes.
This has become a very attractive alternative to many who are
financially overextended.People are using their homes as cash
cows, withdrawing the equity they have built up over the years
to pay off their credit card debt. In fact, for some, this may
be the choice of preference.
However, there are several pitfalls that many overlook in their
rush to use this option. First, you are losing all the equity
you have work so long and hard to build up in your home. Second,
you have now freed up all those credit cards which you just paid
off, which if abused again will get you right back into the same
hot water as before, this time with no equity in your home to
save the day. If you do refinance to pay off your credit card
debt, you must cancel most of your credit cards to remove this
temptation.
Lastly, if you suffer another financial set back, you may now
run the risk of losing the family home through foreclosure; all
this because you made the tragic mistake of turning unsecured
debts, your credit card’s, into a secured debt, your home. You
should definitely talk with your financial advisor before you
refinance to make sure it is the best option for your particular
situation. Remember, what might have been right for your
neighbor is not necessarily the right choice for you.
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