Your Mortgage Refinancing Guide
Refinancing is when a homeowner gets a new mortgage to replace their current mortgage. The new mortgage should help them save money or meet another financial goal. For example, most people refinance to lower their interest rates and reduce their mortgage payments, often saving thousands in mortgage interest. But you can also refinance into a new loan type, shorten your mortgage term to pay off the home early, or cash out home equity. Trusted mortgage broker Riley Boychuk wants to help you understand how refinancing your mortgage can help you out of a tough situation.
Refinancing your mortgage is just like applying for a new mortgage. You’ll need to have your pay stubs, tax returns, and statements to provide to your lender. You’ll need to pass the mortgage stress test on your new refinanced mortgage balance, and you will also need to have a home appraisal conducted. You should refinance your mortgage if you are able to refinance at a lower mortgage rate that covers the cost of any mortgage penalties for breaking your term early, along with other mortgage refinancing fees. You can also refinance if you are looking to borrow from your home equity.
The main reasons people refinance their mortgages are to:
A.Save money via a lower rate and lower monthly payments
Refinancing to get a lower interest rate can save you a lot of money over time, depending on the pre-payment penalty and the size of your outstanding mortgage. If you refinance to a lower interest rate, your monthly payment will likely shrink. You can put those savings toward other expenses or apply them toward your principal balance, which will help you to pay off your mortgage sooner.
B.Consolidate debt
If you have enough equity in your home, you might be able to use built-up equity in your home to pay off high-interest debt through a mortgage refinance. For example, suppose you have a number of outstanding debts, such as a car loan, a line of credit, or credit card bills. In that case, you may be able to consolidate this debt through the variety of mortgage refinance options available.
C.Renovate a home
When you refinance a mortgage, you’re adding to the amount of money you borrowed from a bank or other lender to purchase your home. This new amount is then rolled into the balance on your mortgage. This means you won’t have a separate loan or line of credit payment to deal with, as it’s all covered by your mortgage payment.
Home renovations are a great way to add value and increase your property’s appeal. In today’s market, there is no shortage of people looking for new homes; however, these buyers have limited time because they’re constantly busy working or running their own businesses from home as well! The best thing you can do if this sounds like yourself (or someone else in the family) would be to think about what improvements would make life easier within one’s household - which will lead them down an efficient path towards making forward progress with renovating instead waste valuable energy on things such has hiring contractors who may not deliver high-quality service/product.
D.Investments
If you want to be able to protect your money from risk while still generating a profit, investing in real estate might just prove the most profitable option. There are many types of investment opportunities available for this form: from rental properties and portfolio-type investments that can help increase returns with less volatility than other methods like stocks may carry; all it takes is knowing what kind suits best based on one’s own needs!
E.Start emergency fund
We all know that homeownership comes with unexpected costs. If you’ve lowered your monthly payment by a hundred bucks a month, that’s a hundred bucks you can sock away in financial investment. With additional funds available, now may be the time to build your financial cushion.
If you need help understanding more about how you can refinance your mortgage, reach out to Riley Boychuk today! We are a dedicated and accredited mortgage brokerage in Burnaby, British Columbia. Given our expertise in the industry, we inform you about the various types of home purchase and improvement mortgages so that you can make a wise decision based on your unique situation.
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