Many homeowners choose to refinance their mortgage at one point or another. As an Oakville mortgage broker, it’s my job to make sure all options are looked at when a client wants to refinance. It’s important to find a mortgage that is appropriate for what they need and for their financial situation. Refinancing your mortgage can be beneficial in several ways, which we’ll look at today.
Lower Monthly Payments
Refinancing comes in handy when mortgage rates drop to lower than what you got when you originally took out your mortgage. By refinancing, you can lower your rates as well as your monthly repayments. This leaves you with extra money at the end of the month, which can be used for things you want or to pay down your mortgage even quicker. Believe it or not, a reduction of just a quarter percent in your interest rate can make a noticeable difference in those monthly payments.
Build Your Homes’ Equity Faster
Some homeowners choose to change their mortgage’s amortization from a 25 or 30-year to a 15 to 20-mortgage to build the equity in their home faster. If you have suddenly come into extra money, such as getting a pay rise, and find you can pay more into your mortgage per month, refinancing is a good choice because it allows you to save on financing fees while building your homes’ equity.
Change Your Mortgage Program Type
Another situation where refinancing can be beneficial is when you’ve had a mortgage with an adjustable-rate. A lot of homeowners choose adjustable-rate mortgages because of the low rates they get for the first few years. The problem is that this type of mortgage package can be unpredictable and suddenly shoot up with no warning. So, not only do your rates fluctuate, so do your monthly payments. This is why many people choose to refinance and get a fixed rate option instead. It offers a more stable monthly repayment with no surprises.
Helps Manage Your Credit
Some homeowners will choose to refinance to get a better credit score. Say your credit score has gotten better because you’ve been faithfully making your mortgage repayments on time. You can use this to your advantage by refinancing into a mortgage that has lower interest rates, decreasing your payments.
Debt consolidation is also a reason for refinancing that will help your credit score. If you choose a cash-out refinance option, you can use those funds to pay off other debts. Mortgage loan rates tend to be much lower than credit card rates, so you will be saving a lot of money by paying those off through a refinance, saving even more money per month.
Pay Your Mortgage Off Quicker
As mentioned earlier, refinancing can work towards paying your mortgage off sooner. This is a good option for those who are planning on staying in their home for a long time and who find they have extra funds they can put into their mortgage payments. Say you have been paying $250 a month. You get a pay-raise that allows you to up those monthly payments to $350 a month. Refinancing from a 30-year amortization to a 20-year amortization could end up saving you quite a bit especially when paying off other debt because you’re paying the loan off faster and saving on interest at the same time.
Whatever your reason is for considering refinancing your mortgage, give our Oakville mortgage broker’s a call today to see what options are available to you. We can help you save!