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West Palm Beach Bankruptcy & Business Attorneys > > Debt Relief > Refinancing isn't always the best long-term decision

Refinancing isn't always the best long-term decision


Swapping your current high-interest rate loan for a lower figure is a great way to immediately save money. However, it is important to consider your risks carefully before making a final decision, especially when looking to refinance student loans, credit card debts, and mortgages.

Listed below are some considerations to take before making a final decision:

Student loans

Refinancing a student loan and saving up to $10,000 makes perfect sense. One aspect you should consider though, is federal protection. If you opt for a lower interest rate and in the process switch your federal loan to a private loan, you will lose federal protection. This means that if your income level lowers, your maximum annual payment total will no longer be capped at 15 percent of your income. Additionally, federal programs have loan forgiveness after 20 years, which may apply to your case if your income level remains low.

Credit cards

When exploring the option of refinancing your credit card debt, you’ll want to check into the fees that may be associated with this service. Many lenders will charge an origination fee, something that often cannot be refunded, even if the loan is paid off early. Origination fees are not prepayment penalties per say, but do act in the same fashion in most cases.


Many people looking to refinance their mortgage prioritize low payments over faster debt elimination. When paying off a mortgage debt, the payments made in the early years go less towards the principal, and more towards the interest accrued. If you refinance your mortgage after five years, for example, you begin that cycle over again. Lower monthly payments do not always translate to saving money, an extremely common misconception in mortgage refinancing.

If you are in search of a qualified, knowledgeable bankruptcy attorney in West Palm Beach, look no further than Kelley Kaplan & Eller. We invite you to schedule an initial consultation and find out more information regarding refinancing and the necessary steps in your specific situation.

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