Please take advantage of lower interest rates and successfully refinance a home mortgage with these easy stepsIf it’s for a home improvement loan or to take advantage of the lower interest rates recently making headlines, right now is an excellent time for Canadians to refinance their mortgage. Homeowners should follow these easy tips to refinance a home mortgage and start saving money successfully.
Refinance a Home Mortgage
- Know The All Details – Mortgage holders should take out their current mortgage contract and check the entire document for any provisions regarding penalties for paying off the mortgage early, which is what consumers do when they refinance the old one. Sometimes mortgages incur significant penalties for paying off early, so it would be wise to see if refinancing would be worth it.
- Keep Credit Report Clear – Reviewing their latest credit report to clear up any inaccuracies is a good way for consumers to keep their credit report clear and their scores high because higher scores mean better rates. Additionally, mortgage holders with low scores can see where they are deficient in bumping up their credit rating before trying to refinance.
- Delay Other Major Expenses – Before trying to refinance their mortgage is not a good time for consumers to make any other significant acquisitions to keep the debt-to-income (DTI) ratio down. Lenders use this ratio to set rates, and less debt usually means a better deal.
- Test The Waters – Loyalty doesn’t always pay for homeowners staying with their current lender to refinance their mortgage. Savvy consumers should always get a quote from their existing lender but should also go outside the circle to look for better rates which could mean significant savings in the long run.
- Play Both Sides Against The Middle – With several refinance quotes in hand, mortgage holders can now drive rates even lower by allowing potential lenders to sweeten the pot with matching or lower rates. Consumers should repeat allowing lenders to lower rates until they are satisfied they have gotten the best refinance deal.
- What Is The Cost Of Refinancing – Smart consumers should review what new fees, if any, they will need to pay, such as appraisal fees, legal fees, title insurance, fees from the lender, or any other discharge fees, to see what the closing costs will amount to before proceeding. For example, the closing cost of refinancing a mortgage can sometimes be up to 5 percent of the current mortgage’s value. So if refinancing does not make sound financial reason, then mortgage holders shouldn’t commit.
- What Is The Home’s Value – To refinance a mortgage, a home’s value should be at or above the value of the current mortgage, and it will therefore be necessary to have a formal appraisal to determine the home’s market value which is the selling price on the open market. Save time and money by having an informal assessment to see if refinancing the mortgage would make good financial sense.
- Ask An Expert Or Two – If all the terms and options seem overwhelming to consumers, they should seek a mortgage broker to assist them with any refinancing needs or questions to ensure they make the right choice. And then, just to be sure, they can bounce the information from the first broker to a second one to ensure they understand the information.
Mortgage holders looking at refinancing their current one should not be swayed solely by lower rates but also if refinancing their mortgage would make good overall financial sense. read
And whether it’s to change the length of a mortgage or save with lower payments, a mortgage calculator like this can help Canadian consumers decide.