Question by jacob: Drawbacks in Refinancing Home Mortgage and Cash Back Loan?
I am interested in refinancing my home mortgage and getting a cash back loan. What are the drawbacks to this? Will it affect my credit?
Answer by chase
best not to borrow. refinancing may lower you current monthly payment, but in the long run it will cost you more. best to buy everything with cash, even a home. Living debt free is best.
having no loans
What do you think? Answer below!
The biggest drawback is that you are going backwards. For most of us the goal is to pay off the house, not add to the debt. Not sure what you plan to do with the money, but you are also putting your home up as collateral for whatever else you plan to use it on.
If you are using this to pay off debt, then you are probably taking a small short-term debt and turning it into a 30-year debt.
Finally, you are most likely extending the time left to pay on your home. If you do refi, do so at a term that is EQUAL TO OR LESS than the years left on your current loan.