If you’re trying to determine if now’s a good time to refinance your mortgage and free up some extra money, speak with a qualified mortgage expert. They will help you determine if refinancing is the right option for you and your family.
If you’re looking to reduce your costs and lower your monthly mortgage payment, then now may be a great time to do just that. Mortgage rates are currently low and switching to a lower rate may save you a lot of money – possibly thousands of dollars per year. There are penalties for paying your mortgage loan out prior to renewal, but these could be offset by the extra money you could acquire through a refinance.
If you’re able to lower your fixed-rate mortgage, or change from a fixed-rate to variable-rate mortgage, you could be putting more money in the bank each month. Make sure you speak with a mortgage broker about variable-rate mortgages, however, as this product adjusts with the bank rate and can fluctuate up or down.
With access to more money, you will be better able to manage your debt. Refinancing your first mortgage and taking some existing equity out could also help you pay off some of your high-interest rate credit card debts. You could also take some extra money out to invest, go on vacation, do some renovations or even invest in your children’s education. Refinancing your first mortgage is typically more cost effective than taking out a second mortgage.
Don’t forget that by refinancing you are extending the time to pay off your mortgage. That being said, there are many ways to pay down your mortgage sooner. Most mortgage products have prepayment privileges that allow you to pay up to 20% of the principal per calendar year. You may not be able to use any extra money you have now to take advantage of these extra payments but, once you are in a position to do so, it is highly recommended to try and make some additional payments to reduce your principal (the true value of your mortgage minus the interest payments) and the amortization period (length of your mortgage).
If homeowners fail to take the time to thoroughly research their options and simply sign the renewal offers they receive from their bank, credit union or other lender, they could end up paying thousands of dollars more per year in interest.
In the current credit-crunched lending environment, now more than ever it’s important to take the time to contact a mortgage agent to find out your options.
By refinancing now and paying off some debt, you can put yourself and your family in a better financial position. It’s very important to not rack up your credit cards after refinancing, however, so set your goals and budgets, and stick to them!
[Source-Dominion Lending Centres]
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