Looking out for #1 when Refinancing!
We are all currently inundated by several different streams of marketing egging us on to take the plunge and refinance our mortgages. While I am certainly very excited about the benefits of refinancing I think that it is sometimes necessary to inject a bit of realism into the discussion. It is not an easy time to be a mortgage lender at the moment, especially since the ‘Credit Crunch’ is making it ever harder to obtain ‘wholesale credit’ on the international market. Banks and other mortgage lenders are therefore frantically searching for strategies to survive the current ‘lean years’.
One obvious way in which banks are trying to stay afloat is through being much more circumspect in terms of who lend to as this is a means to protect their ‘books’ from further liabilities (not that it does anything for the massive liabilities already on their books of course). If you have a low credit score you’ve probably long since cottoned on to the reality that it is becoming ever more difficult to obtain credit (although not impossible, more on that in a later post) and that the credit you are being offered is quite expensive.
Another way that banks are trying to cope is by returning to some of the fundamentals of extending credit (talk about shutting the door after the horse have bolted!) by diligently trying to court ‘good’ customers (i.e. people with excellent credit histories). This means that a lot of the current marketing frenzy has more to do with some of the banks needing help (“Come over and help us to shore up our flagging fortunes!”) than with them really offering best value.
It could be of course that you are particularly altruistic and ready to help, if that is the case you are more than welcome to just respond to the first heartfelt appeal! I suspect however that most of us would prefer to make decisions on the basis of what is best for us and for the banks to sort out their own mess. I want to reiterate therefore what I have said many times on this blog. Make sure that you do your homework before taking the plunge. There are indeed some excellent deals out there on the market but you may have to search around for them a bit (this blog is of course a good place to start!).
I suppose all of the above illustrate again what I meant with the title of this blog. Refinancing is sometimes a great idea, but is has to be done in the right way. And by that I mean right for you and not necessarily only for the bank!