Million Dollar Mistakes

There are many areas in our life that could constantly face improvement. The challenge usually lies in the gray area of "not knowing." Most of us in a sound state of mind want to improve our lives and want to get ahead. Sometimes that feat is hard when we keep doing things that are actually holding us back, unbeknownce to us.

One such example is completely rampant in American culture and eats away millions of hard earned dollars every year. The small, seemingly harmless act of refinancing. I am careful in how I write about this subject as it is not necessarily an evil thing in and of itself, however coupling a refinance with ignorance on the rules of money can spell out a disaster in your pocket book.

The challenge with a refinance comes from the motive. Most people go through the process of refinancing for the immediate gratification of freed up monthly money or even cash out. Saving money monthly is great and sometimes it is necessary to take out equity for a loan for something important (hint hint: a Vegas vacation wouldn't qualify for important). If one is to refinance, it should be done with a long term focus in mind.

While sometimes this refinance can get you out of a tight monthly bind by putting in an extra few hundred dollars in your pocket, 95% of the time you're also restarting the clock. Yes, that means your 30 years starts over! So if you've only been at your home 5 years or less(which is the time frame that just about every penny of your payment goes to interest), and you refinance, you can basically look at the time vested in your home so far as rented. Yep, you just rented your home, and restarted the interest clock. So think thoroughly about the long run before entering this venture.

Stay tuned for more details regarding refinancing, and get ready to kiss financial ignorance good-bye...