Uncertainty in the economy has home buyers wary of the conflicting types of information available to them. Apparently we are operating in a two-tiered economy: a booming economy in the mining sector and the flat economy that most of us live in.
This has left many mortgage holders wondering whether they should refinance, lock-in a fixed rate or simply stand still and watch what unfolds.
Uncertainty and confusion exists among mortgage holders. No one really knows what way rates are headed and the proposition of refinancing your mortgage could have as many pitfalls as benefits.
These are some of the refinancing myths:
Myth 1: Low Rate Is The Be All and End All
Borrowers often forget that many of the low rate loans lack other money saving features such as mortgage off-set facilities. Borrowers should also check as to whether the low rate is for the life of the loan or just an introductory period.
Myth 2: Change Lenders For A Better Deal
A common misconception is that you need to change lenders to obtain a better deal. This is a falsehood as your current lender generally will negotiate in order to maintain your business.
Myth 3: Debt Consolidation Is A Good Idea
Many people believe that by consolidating their debts when refinancing that they will be better off in the long run. This is untrue. Often a credit card or personal loan refinanced along with a mortgage will mean that the debt will be paid out over 20 – 30 years rather than 3-5 years. What is often forgotten is, so too will the interest!
If you are considering refinancing, ensure you research what loan and what features are best for you and that you shop around for all your options. Talking to a good finance broker is the easiest way to do this.