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While benefits abound for home mortgage refinancing, that doesn’t mean it’s always the right move for everyone. In fact, in some situations, it could be a disastrous decision. If you are in the Orlando mortgage market here are some examples of when you should just say no to the idea.

Reason #1: Credit Problems

Some people believe home refinancing will be the answer to their credit problems because it will reduce their monthly payments and free up income so they can pay off their other debt. If, however you are already having credit problems, you may not qualify for a lower interest rate to make house mortgage refinancing pay off for you. You could even end up with a higher interest rate plus a longer pay-off period.

Reason #2: Paid on Loan for Long Time

If you’ve already been paying on your home loan for two decades, home mortgage refinancing may not make much sense either unless you choose a 10 or 15 year term for the new loan. Otherwise, you might end up paying a lot more for a loan you’d have paid off in another couple of years. There are also other options to consider, such as lines of home equity that might make more sense in your present situation or a reverse mortgages. Before you refinance you should consult a financial advisor.

Reason #3: Equity is Nearly Gone

Your home’s equity is the difference between its value and the amount of debt owed on it. If you want to get a good rate on your home mortgage refinancing, you need to still have at least 20% of your equity available as a cushion. That means if your home is valued at $400,000 but you owe $300,000 you don’t want more than $80,000 of your equity tied up in other debt, including home equity loans or as collateral for other loans.

If you’ve used up a great deal of your equity already, you don’t want to attempt to get home mortgage refinancing. You should, instead try to find other ways to cut your spending until you pay down the debt and free up some of that equity. You could, of course, try to get a higher appraisal which might be wise if it’s been awhile. However, if you’ve maxed out that much of your equity you need more help than home mortgage refinancing can offer.

Reason #4: Spending Issues

One of the biggest reasons not to secure home mortgage refinancing is if you’re not going to use the freed up cash wisely. Too many people who choose this option end up overspending after they sign the paperwork that they end up in worse financial shape after receiving the funds than before. All of the benefits of taking out the new mortgage are lost, but the borrower still has to deal with the problems associated with the loan.

If you know spending is a problem, consider getting credit or debt counseling instead of refinancing.