Dallas TX Bankruptcy Attorneys Advise on Refinancing Dos and Don’ts
In Credit Repair of CreditGuru (July 15, 2009 3:45 am)
Credit cards companies sweeten the lure of their advertisements with offers to transfer already existing credit card debt to their card at lowered interest. Financial groups offer home refinancing at lowered interest rates, low down payments and no closing costs. If your credit card debt is high or you are scrambling to make your house payments, this may save some money in the short term, but this can be risky to both your credit rating and the balance of your debt. Some of these rates are short-term and increase in a few months or a year. So, when is refinancing a worthwhile idea? Dallas bankruptcy attorneys can advise you further on this, but for now, here are some general guidelines:
Refinancing Your Home
• If you can refinance your home for the same amount of time left on your original mortgage or a lower interest rate and without huge additional fees, then do it.
• If you have a bank loan and can refinance with another bank loan with all of the above conditions met, then do it.
• If you can refinance your home for substantially less than its market value and come out with significant cash to apply in other areas, then do it.
Refinancing Your Credit Cards
• If you can refinance your credit card balances for a better interest rate and all the other terms of the loan are comparable, then do it.
• If you are not in default on your mortgage or in financial disorder and a refinance on your home to pay off high interest credit card debt has tax advantages, a lower interest rate on the mortgage and the loan is for the same or less than the length of time remaining on the original loan, then do it. A word of warning though, DO NOT refinance your home only to pay off credit card debt unless there are advantages for the cost of the mortgage as well.
• If you can transfer your credit card debt to another company for less interest and no fees associated with the transfer, then do it.
Some Don’ts:
Don’t let a persistent creditor talk you into refinancing to satisfy their debt. These people are trained in the art of intimidation and they are very good at it. However, their parent company is often reluctant to pursue debt through the court system and they are left only with the option to intimidate. This debt can be negotiated better through a credit counselor or by contacting the debtor directly.
Don’t refinance your credit card debit with a loan you have secured with tangible property, such as your home or vehicles. You may be putting these previously unencumbered assets into jeopardy if you have to default on the credit card balances or declare bankruptcy.
Dallas TX bankruptcy lawyers can offer you more advice and suggestions than are listed here, so contact one of them for more complete information. Even if bankruptcy seems to be an alternative on your horizon, contact bankruptcy attorneys in Dallas before you make any major changes to your current financial situation.
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