Question by Marcus: Isn’t refinancing a mortgage or car payment a terrible idea, it just doesn’t add up, can you explain it?
I don’t understand, why would you borrow money with a lower interest rate, to pay off borrowed money? Won’t you have to repay that refinanced funds? I clearly do not have a full understanding of this subject, and would appreciate a clear and concise answer to it, 10pts!
Okay mom, but eventually you’ll have to repay that mortgage too won’t you, thus adding to what you already owe?
Answer by Huntsman
Also it does not make sense when people re-fi for less than a 1% reduced interest.
They have to pay closing costs which can run up thousands.
If most of these people did the math, they could realize they could just put the thousands as an extra payment to their mortgage and come out ahead
Why do people refinance usually?
1. Lower interest rate in case they intend to keep the home for many years
2. They are in a financial mess and need lower house payments, no matter what the costs
Give your answer to this question below!