Why should you bother Refinancing?

Most people understand that by receiving a lower interest rate, they can save a little money on their home loan; however, the savings available can be greater than expected. Let’s work through the math: consider an existing home loan with these terms.

• $150,000 outstanding balance
• 5.95% annual interest rate
• $1,000 monthly payment
• 23 Years until paid off
• $125,290 in interest over the life of the loan

At this rate, the total interest paid by the end of the loan will amount to $125,290— nearly the entire value of the loan! However, we can reduce this cost by refinancing to a cheaper loan. Let’s revisit the same home loan, but apply figures from a refinance deal at a 5.4% annual rate:

• $150,000 balance
• 5.4% annual interest rate
• $950 monthly payment
• 23 years until paid off
• $2,500 in fees and additional expenses
• $114,700 in interest and fees over the life of the loan

By refinancing to a loan that is .55% cheaper, you are able to pay $50 less a month and still save just over $10,500 in interest payments; this even includes the fees you will incur from switching. You can use FIDO’s online multi-loan calculator to check these figures, or compute how much you may able to save on your own home loan by refinancing.

How To Get The Best Rate

While your current home loan lender may approach you with a refinancing deal, be careful before blindly accepting the offer; there may be even better rates available elsewhere. Some ways to ensure you get the best rate are:

• Compare rates from your current lender against rates from new lenders to find the cheapest available rate
• If you find a rate lower than your current loan rate, ask your current lender if they can match that rate to keep your business
• Ask the lender if you qualify for any special rates or fee waivers (it will help to have really good credit or history with the lender)
• Ask a new lender if they can waive their application and other fees in order to gain your business (again, great credit will help)

Things To Watch Out For

When you refinance your home loan, you may be subject to various fees and unexpected expenses. These fees could come from both the old loan contract and the new one. When considering refinancing your home loan, you need to understand that:

• Some home loan provisions will have a break-up fee or termination charge if you end the contract early and refinance with another lender.
• You also may face some administration and application fees for your new loan, so beware of the extra fees that may reduce the attractiveness of refinancing.
• The extremely low rates from other lenders are often teaser rates. Be sure to examine how long these low rates last, and what the full rate will be when it comes into effect.

FIDO also has a list of steps for switching your home loan to see if a refinancing deal will benefit you.

In Conclusion…

By applying these tips and warnings to your search for a home loan refinance, you may be able to save thousands of dollars over the life of your loan. Keep in mind that there may be switching costs, and the lower rates may only be a teaser rate. Be on your guard and ask questions; this is the only way you can gain the information you need to make the right decision about refinancing your home loan.

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* “Debt relief is just a phone call away!”

* “Stop paying your debts today!”

* “Erase your high interest rate! Call now”

Every year, millions are lured in with high hopes. And it’s easy to understand why.

With so many individuals now carrying high credit card balances, never before has the prospect of credit card consolidation appeared more appealing. Yet, despite the glorified status lenders have bestowed up them, credit card consolidations can quickly turn a financial problem into an irrevocable financial crisis.

The promised “quick fix” of debt consolidation is powerfully tempting. But the slippery slope of consolidation loans can introduce a variety of other threats to one’s fiscal health.

Among the gravest dangers:

Small Fees Become Big Expenses

Consolidating debt isn’t free. And the costs (hidden or straightforward) can be significant. Securing a new loan or consolidating old ones may not only incur administrative and processing fees, you may also be penalized for paying off your balance early (assuming, of course, that you could). Even worse, consolidation loans are frequently secured against one’s home, which subsequently leads to legal fees and a host of other ancillary expenses. There is no shortage of “small fees.” When totaled, it’s a heavy price tag for credit card consolidation.

The Balance Transfer Catch

Balance-transfer opportunities are a dime a dozen. And although they work for the short term, zero or low rates only last for a limited period of time. If you think you can repay the full balance during that time but ultimately can’t, you may soon end up paying a higher rate on your outstanding debt than you were before the consolidation.

Stranger Danger with Debt

As children, we were frequently told never to talk to strangers. Some credit lenders should have been included in those maternal warnings. Because numerous debt consolidation providers make substantial commission on balance transfers and loan consolidations, there is no shortage of misleading advocates for consolidation trying to squeeze even more money from your pockets.

The Risk Factor

Taking out consolidation loans or having to switch balances back and forth leaves a blemish on your financial history. After a substantial amount of this sort of activity is recorded, it will portray your financial responsibility in a negative light and leave you a “high-risk” candidate for financial products and services in the future.

Does Credit Card Consolidation Make Sense For You?

It depends.

If anything is easier to get into than debt, it’s more debt. And, without exception, this is ironically the gravest danger posed by credit card debt consolidation.

Unlike a debt consolidation loan, which is typically secured debt, credit card debt itself is unsecured debt. Once your present balances are consolidated through a loan or multiple balance transfers, your remaining credit cards return to having a zero balance with ready access.

If that zero figure remains unchanged throughout your entire repayment process on consolidated debt, it might be in your best interest to seek a credit card consolidation opportunity. If, however, you have any inclination that you will soon max-out your credit cards again and abuse your consolidation process as a renewed license to spend, avoid this financial alternative at all costs.

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