Many homeowners with mortgages have considered refinancing at some point or another. Refinancing a mortgage essentially replaces your current mortgage with a new one. It can be beneficial for those who want to decrease their current interest rate, lower their monthly payments, pay off their mortgage faster, tap into home equity, or turn an adjustable rate mortgage into a fixed rate one. It is important to remember, however, that refinancing may not be the right decision for everyone.
If you think it is right for you and you are ready to start the process of refinancing your home, we recommend making an appointment to speak to one of our Winnipeg Mortgage Brokers and ask some key questions about your financial situation and your options. Here are some questions you should ask:
Q) Are there costs associated with refinancing?
Yes. There will be closing costs and possibly an appraisal fee, legal fees and more. If you are breaking your mortgage early, you are likely to incur penalties. There may also be additional costs depending upon whether you have a standard or collateral mortgage. If you aren’t sure what type of mortgage you have, your One Link Mortgage Broker will be able to help you.
Q) Do I have to pay a penalty?
You will only pay a penalty if you are breaking your mortgage before your term is up for renewal. The amount you will have to pay will depend upon the type of mortgage you have, your lender and how they calculate the penalty. Penalties can vary, but tend to be the greater of three months’ interest or the Interest Rate Differential.
Q) How much will the closing costs be?
This will depend on the size of the mortgage you are looking to acquire as well as any lawyer fees and fees associated with registering the new refinanced amount. Your Mortgage Broker will be able to assist you with the actual amount, but generally speaking, you will want to budget around 1 to 1½ per cent of the total mortgage amount.
Q) How big of a mortgage will I be able to get?
This will depend on the amount of equity you have in your home. In Canada, mortgage holders can access up to a maximum of 80 per cent of their home’s value less any outstanding mortgage balance. Your Mortgage Broker will be able to review your personal situation and discuss the finer details with you.
Q) How long is the term of the mortgage?
When you refinance, you will have a new term and amortization schedule. The length will depend on the rate, the lender and the lender conditions you commit to.
Your home is the biggest investment you will ever make and it is important that you understand all the details of your mortgage. Don’t be afraid to ask these questions and more when you meet your Mortgage Broker. They are here to help you! Call 204-928-7722 to make an appointment with one of our Winnipeg Mortgage Brokers today!
Source: Ana Durrani, provided by realtor.com