Your mortgage can be renegotiated for a variety of reasons when you refinance your mortgage. In essence, this means paying off your current loan and replacing it with a better one. You can reap a host of benefits from mortgage refinancing when done correctly.
Refinancing might be a good option for you if you have any of the following reasons:
*When there is a large increase in the value of your property, you would like to leverage it
*To upgrade or renovate your home, you need equity out of the home
*Consolidating your debt is on your mind
*Having kids in college is a big deal for you.
*Divorce is in the works for you
*Interest rates are too high and you’d like to lower them
*Your mortgage needs to be converted from fixed to variable (or vice versa)
Refinancing has additional benefits besides reducing financial stress and putting you back on track financially:
The first. Refinancing a mortgage can provide you with a lower interest rate. There is no harm in shopping around, even if a low interest rate isn’t everything (you should also consider mortgage terms, penalties, etc.). You can rely on me as a mortgage professional to shop the market for you and see if there is a better mortgage product for you!
The second. Consolidate Debt: Credit cards, revolving credit lines, and school loans are just some of the debt types you may have to consolidate. The interest rates on most consumer debt are much higher than those on a mortgage, but did you know that? Paying off these debts can be made easier through the refinance process. In spite of the fact that your mortgage may increase, your overall payments could be far lower and you would only have to make a single payment instead of several. Keep in mind, you need at least 20 percent equity in your home to qualify.
The third. Life changes constantly, and sometimes you need to pay off your mortgage faster or change the type of mortgage you have. If you have a little extra money and want to put it towards your mortgage, or if you’re weary of the market and want to lock in a fixed-rate for peace of mind, then you might want to lock in at a fixed rate. A mortgage specialist can talk you through potential penalties if you are not able to wait until your mortgage term is up.
As a fourth. Build Equity: Building equity in your home is one of the main reasons for buying a home. Equity can be defined as the difference between your property’s market value and its mortgage balance. In some cases Up to 90% of your home’s appraised value can be accessed in cash when you refinance your mortgage!
It is true that refinancing can enable you to tap into 90% of the value of your home, but it comes at a cost. In the event that you refinance during your term, it will be considered a breach of your mortgage agreement, which can result in significant fees. Prior to refinancing, you should wait until the end of the mortgage term so you have plenty of time to weigh your options.
Refinancing can also prevent you from qualifying for default insurance, thereby limiting your lender options. Finally, you’ll have to requalify under the current rules and rates (including passing the “stress test”) to ensure you can afford the refinanced mortgage.
Feel free to contact me today if you have questions about mortgage refinancing or if you would like to know if it is the right option for you. Also You can call me at 403-253-2022