What You Should Know About Refinancing a Loan or Mortgage
Refinancing a loan or mortgage sounds enticing when you are guaranteed lower interest rates and lower monthly payments. However, anything that purports to lower the amount of money you will owe each month often tricks people into thinking they are getting a better deal. While there are certainly reputable lenders and creditors who may in fact be helping you to obtain a better deal, there are many that seek to trap people by failing to explain the complete terms of the refinancing agreement (those words that we tend to overlook, as they’re typically in fine print).
There are different types of refinancing options that can either allow you to borrow additional funds and adjust the monthly payments and time period for repayment, or offer to adjust your current loan so that you owe less each month. For example, if you would like to use additional funds to complete a home project or pay for home or car repairs, you may consider going to your current lender and asking to extend your existing loan.
On the other hand, you may be contacted by a new lender you are not familiar with, and offered a refinance plan that assumes the loan of your existing lender. This often occurs when people receive advertisements in the mail that state what you are currently paying each monthly and how you will owe less by switching to the new lender. The first reaction many people have to receiving a persuasive advertisement in the mail, or even an email, is how the new potential lender received your information. Unfortunately, your information is sold from lender to lender, so you should expect that many lenders out there are familiar with your credit history.
What Lenders Claim to Offer You with their Refinancing Options
If you are seeking to refinance an existing loan with the same lender, then you are likely not being taken advantage of, because you yourself are seeking the additional funds and you already have a good relationship with your lender. However, if you are offered a refinancing plan by a new lender, you should expect to see a guarantee that you will be paying lower monthly payments at a lower interest rate.
What the lenders will not make clear to you is that you may have to extend the time period for paying your loan back. For example, if your current plan is to repay the loan back in 48 months, the refinancing plan may require you to extend that time period to 60 months. By doing this, your monthly payments may be lower, and the overall interest rate may be lower, but by extending the loan, you could be paying more when it’s all said and done.
To be sure that a refinancing plan is legitimate, you should consult with a debt-management and bankruptcy attorney. This attorney can review your potential refinancing options and provide you with an honest opinion as to why a particular refinancing plan may or may not be in your best financial interest. Even the most careful consumers are at risk for being taken advantage of, and there is no shame in seeking the opinion of an experienced legal professional.
Contact The Law Offices of Georgette Miller and Associates, P.C. Today
Refinancing your debt can certainly help you avoid bankruptcy if you are otherwise able to manage your debt. However, it is easy to be taken advantage of by untrustworthy lenders. In order to ensure you are paying off your debt in the most feasible and realistic way, you should consider speaking with a Philadelphia debt-management and bankruptcy attorney. At The Law Offices of Georgette Miller and Associates, P.C., our qualified debt-management and bankruptcy attorneys have helped their clients get control of debt and stop the collection activities of harassing creditors. Our law firm provides debt-management and bankruptcy services to businesses and individuals located in and around Philadelphia, PA, New York, New Jersey, Washington, D.C., and Wilmington, DE. To schedule a consultation, contact our office today by calling (866) 96-GMLAW.