During the day, as you watch TV or scroll the web, you’ll undoubtedly encounter at least one ad that encourages you to refinance your existing loans. As with any advertisement, the company that’s engaged in self-promotion is trying to turn a profit. But refinancing can actually be extremely beneficial to you, as well.
Suppose your credit history and score are less than ideal due to existing unsecured debt. In that case, the debt resolution team at Resolvly can help improve your chances of qualifying for refinancing in the future by connecting you with a consumer law firm that will fight on your behalf to dismiss your unsecured debt.
Before you make the leap, it is important to understand exactly what refinancing is and when it’s the best time to do it. With proper timing, you can save thousands of dollars over the lifetime of your loan.
What is Refinancing?
Simply put, refinancing is the act of paying off an existing loan with a new one. Paying off the old loan will not leave you debt-free, however. You will be transferring your debt from one company to another.
The purpose of refinancing is to improve your financial position. While the total debt that you owe will not decrease, you will often gain more favorable terms with the new loan. If a refinance does not result in lower rates, a consolidated payment, or shorter terms, then it is likely doing you more harm than good.
Common Reasons for Refinancing
There are many reasons why people choose to refinance existing loans. One of the most prevalent reasons is to reduce the interest rate of their mortgage. When you purchase a home, the interest rate that you receive is based on your credit score and the market conditions at the time that you take out the mortgage.
Since the market fluctuates, there is a good chance that the available rates will drop below your current rate at some point during the life of your loan. While a reduction of 0.1% interest will not lead to huge savings, dropping a full percentage point off of your mortgage can save you thousands of dollars over the course of several years.
When you’re considering refinancing, there is much more to it than just the interest rates. If you have paid off enough of your home to drop the PMI (property mortgage insurance), then refinancing may be a great option.
Some consumers use refinancing to consolidate existing debts or to start a business. If you have multiple credit cards with high monthly payments, combining them into one monthly payment can help you to get out of debt faster. This is especially true if your consolidation interest rates are lower than the rates of your existing individual debts. It is pretty common to run up credit cards to start your business venture but the monthly payments can be a drag on cash flow.
Is Now a Good Time to Refinance?
As you can see, there are many great reasons to refinance. You just have to find the right time for you. One great way to do so is with the use of a mortgage calculator.
Using this simple tool will allow you to calculate potential savings. You can even plug in different interest rates so that you can know if the offer you are receiving is worthwhile.
Will Unsecured Debt Prevent Me from Refinancing?
Unfortunately, unsecured debt can prevent you from refinancing. It can lead to unfavorable interest rates or outright rejections from lenders.
If you have been denied the opportunity to refinance a loan or you’re concerned that you have too much unsecured debt, contact Resolvly. We will pair you with a law firm that can help you to resolve your debt with favorable terms. This can open the door to untold savings through refinancing, securing your financial future.
Resolvly: Who We Are
Resolvly is a Florida Bar-approved lawyer referral service that helps clients nationwide to connect with consumer protection attorneys that specialize in debt resolution. Founded in 2015, the Boca Raton-based company has become an industry leader by helping thousands of Americans find the right legal solution to reduce or eliminate their unsecured debt.
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