Refinancing Amid Mixed and Listless Mortgage Rates

It's not surprising that there would be no definitive trend for mortgage interest rates at this time of year. Most of us are distracted with one or another holiday season, regardless of religious or cultural affiliation. So, the houses aren't selling and we aren't out there negotiating mortgages -- on the whole.

The challenge for all of us is how to predict and work with the current mortgage market. Many are still refinancing homes, in order to get access to equity for renovations as well as debt reduction. If this is you, be sure that you've thought carefully about this. Raiding your home's equity provides you with "one time" money that has to be paid back (in order to pay off your home).

If you are refinancing to invest in your home, you are likely okay. But always consider whether you can handle a longer time paying a mortgage, or if the benefits of the renovation really work in your favor. Otherwise, you may be better off saving up to complete your renovation.

If you are refinancing in order to pay off debt (especially credit card or high interest debt) this can be a great strategy. But you'll also have to address the problems that got you into the financial pickle in the first place. Otherwise, you may simply head down the same road again -- and this time, you won't have that extra equity to bail you out.

Many of us will have accrued a bit too much debt for the sake of the holidays and gift-giving. If this is you, you'll have to address the problem -- overspending -- even if you can refinance this year in order to make that credit card debt go away. Keep in mind -- while the credit card debt went away, you still have the same amount of debt overall! It's simply moved from your credit card to your mortgage. So while you may be enjoying a break from one kind of bill, you will still be paying for your purchases.

Michael

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