Refinancing Can Be a Useful Tool
Refinancing your mortgage can be a great option for many people. It allows you to renegotiate your current mortgage agreement so that it better suits your needs and can potentially save you money. There are many reasons you might consider refinancing, such as leveraging large increases in property value, taking out equity for renovations, consolidating your debt, or getting a better interest rate.
Lower your Interest Rate
When done properly, refinancing your mortgage can provide a number of benefits. It can reduce financial stress and help you get on track for your financial future. You may be able to access a lower interest rate and consolidate your debt, which can free up cash. Plus, you can convert your mortgage from fixed to variable (or vice-versa).
To qualify for refinancing, you typically need to have at least 20 percent equity in your home. Keeping this in mind, it’s a good idea to talk to your mortgage professional to find out if refinancing is the right choice for you. They can help you to understand your options and find the best mortgage product for your needs.
Altering Your Mortgage
Modifying your mortgage is an option when life throws you a curveball and you need to make changes. It could be that you have come into some extra money and want to put it towards your mortgage, or you feel uncertain of the market and would like the security of a fixed rate. It is best to make these changes at the end of your mortgage term, but make sure to speak with a mortgage specialist to see if there are any potential penalties for waiting.
Accessing your equity
Aside from refinancing, you can also utilize your home equity for financial needs. Home equity is the difference between the market value of your property and the balance of your mortgage. You can refinance your mortgage to access up to 80% of this equity, but it’s important to remember that this comes with a cost. If you opt to refinance during your term, it is considered to be breaking your mortgage agreement and could end up being quite expensive. It is best to wait until the end of your mortgage term before refinancing, and plan several months in advance so you have the time to weigh your options.
Refinancing your mortgage can also have some drawbacks. For example, it can prevent you from qualifying for default insurance and limit your choice in lenders. Plus, you will have to re-qualify under the current rates and rules, including passing the “stress test” again, to ensure you are able to carry the refinanced mortgage.
If you are considering refinancing and need guidance, please don’t hesitate to reach out to a Mortgage Architects agent. Together, you can review your current mortgage, financial goals and future plans to determine the best solution to fit your needs. With the right help, refinancing can be a great way to put yourself in a better financial situation.