The Pink Pages

Refinancing 101: When It Pays To Get a New Loan

Written by Lucie Misfedlt | Nov 29, 2023 2:00:00 PM

If you're feeling a bit strapped or just want to improve your financial situation, refinancing could be your ticket to a brighter financial future. Whether it's your mortgage, auto loan, or some other kind of financing, we at City & County Credit Union are here to help you understand the ins and outs of refinancing.

Let's dive into how it works, when it's a good idea, and some tips for getting the best deal.

What Does Refinancing Mean?

In a nutshell, refinancing involves replacing an existing loan with a new one that is better suited to your current financial needs and circumstances. You can refinance mortgages, auto loans, personal loans, student loans, and even credit card balances.


Keep in mind lenders will re-evaluate factors like your income, credit score, debt-to-income ratio, and repayment history before approving a refinance. For loans like autos, the vehicle's value and condition also come into play.

Weighing the Pros and Cons

Let's talk about why you might want to refinance. There are some sweet perks, such as:

  • Lower Interest Rates: You could snag a lower interest rate, which means paying less in the long run.
  • Lower Monthly Payments: Your monthly payments could shrink, making your budget happier.
  • Different Loan Terms: You can switch things up with a different loan term or type, tailored to your needs.

But, of course, there are a few speed bumps to watch out for:

  • Paying More Overall: If your new loan's term is longer, you might end up paying more in interest over time.
  • Losing Protections: If you're thinking of refinancing federal student loans, you might lose some of the valuable protections they offer.
  • Fees and Penalties: Don't forget about those fees and prepayment penalties that can come with processing a new loan.

At CCCU, we're here to help you see both sides of the coin. We want you to make an informed decision that works for your unique situation.

When Should You Refinance?

Timing is everything when it comes to refinancing. Here are some prime moments to consider:

  • Interest Rates Drop: If interest rates have fallen since you took out your current loan, it might be time to pounce on a better deal.
  • Improved Credit: If your credit score has gone up significantly, you could qualify for more favorable terms.
  • Monthly Payment Stress: If your current monthly payments are giving you nightmares, refinancing could offer some welcome relief.
  • Need Some Cash: If you're in a position to qualify for a cash-out refinance, you can access some cash while still benefiting from a new loan.

Comparing Quotes for Your New Loan

To find the best rates out there, get quotes from multiple lenders within a one-month window. This minimizes the impact on your credit score. Always make sure that refinancing is going to save you money in the long run before signing on that dotted line.

Let CCCU Guide You Through the Process

Refinancing can be a powerful tool in your financial toolkit, but it's important to use it wisely. At CCCU, we're here to guide you through the process, ensuring that you get the most out of it. Let's connect and start exploring your options today!