Why a Real Estate Attorney in New York Might Advise Against Refinancing

13337594_sOver the last few years, many people in New York have received a thorough, if perhaps not totally desired, education in mortgages and the real estate market. Where once people might purchase a home in their youth and live there for the rest of their lives, burning the mortgage after thirty years of dutiful payments, in the post-bubble age people are paying closer attention to interest rates and often turn to a real estate attorney in New York to help them refinance.

Refinancing a mortgage can have great benefits: A lower interest rate and payment, a shorter term – even both. But under some circumstances a real estate attorney in New York might advise against a refinance deal despite these benefits.

Taxes and Fees

Refinancing is essentially paying off the old mortgage with a new one, and refinancing requires borrowers to pay many of the same fees and taxes associated with the initial mortgage. These can add up to thousands of dollars. Sometimes these fees can be “rolled up” into the new mortgage and financed, but a real estate attorney in New York would likely advise against that.

Higher Balance

Often a refinancing will result in a lower rate or shorter term, but actually a higher principle once all those fees and other costs are accounted for. The higher balance can tip a borrower’s debt load in the wrong direction and leave them struggling to get other loans or credit.

In the end, a refinancing must be treated with the same caution and due diligence as any large loan, and should never be rushed into. An attorney’s advice is essential to understanding all the terms of the loan, and that the new circumstances will actually be a real improvement.

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