Why Mortgage Refinances Are Essential To Any Mortgage Holder

Mortgage Refinancing Krishna Menon 23 Apr

Mortgage Refinance refers to the refinancing of a mortgage at the end of its term or amidst the mortgage period. As it literally means, mortgage refinance offers the mortgage holder the benefit of extending the mortgage period through refinancing the mortgage with a new mortgage, technically. Mortgage refinance helps the mortgage holder to enhance his mortgage capacity for a period further than his original agreed mortgage period. The mortgage refinances loan can be either from your original lender or a new lender, provided you have consented your original lender for the mortgage refinance from another lender.

Mortgage refinance gets into place a new mortgage. This new mortgage can also be a customized mortgage agreement, and that is the biggest advantage that a mortgage refinances offers to its customers. This new loan can offer you benefits. The most beneficial could be the lowered interest rates if the rates existing at the time of the mortgage refinance are lower at than the time of the original mortgage. Other benefits could be increasing your financial facility by renewing your mortgage which was supposed to lapse, and hence, paid back. If you dig deep into the mortgage refinance benefits and collide it with your financial position in the right manner, then you may also be able to churn out some tax benefits for yourself.

Getting your mortgage refinance may have you incur a few costs, which are insignificant when compared to the actual benefits that you derive out of it. The costs could be the fees that you need to pay your new lender for they have offered you a refinance, legal documents and filing fees, credit check fees etc. So it is up to you or your debt consultant to suggest you whether mortgage refinance is good for you or not. You have to analyze whether the benefits that you receive are overthrown the financial costs which you will incur for the mortgage refinance and whether the extended loan period will help you to focus on your business’s finances. Mortgage refinance would make the most sense when either the interests rates have slumped or your credit rating has improved.

How Is Home Equity A Double Edged Sword

General Krishna Menon 15 Apr

Home equity is the value of your property in which you have the only interest and none else is a part of the home’s that market value. So, you can come to the conclusion that home equity is the market value of your property subtracted from the total value of your property on which a lien exists. The lien so existed by a third party on your property could be for the reason of mortgage, home loan, creditor or any such. Home equity is the value of your property that you shall get in your hands if tomorrow you decide to sell your house property. Home equity has varied uses and you can use it effectively to plan out your finances and optimize them.

In Canada, at any point of time, the minimum value of home equity any homeowner should possess is 20% of the value of the property. Which means it is only up to the size of 80% of the value of your property that you can borrow a loan of. We can bring out from the above that one can gain home equity in his property through two ways

  • If the market value of the respective property increase
  • If the homeowner pays back the principal or clears the obligation towards the lien that exists upon the property

How To Utilize Your Home Equity

-Take it out and invest it

If you have home equity higher than 20% of the property value, and you have investment opportunities knocking on your door that shall give you a better rate of return than the net cost of borrowing on your home equity, then you must opt for a mortgage against the home equity available to you.

 

-Take a loan against it

If your finances are tight and you still want to purchase a house property, then go for a home loan against the equity that you would be so receiving after the house purchase.

 

-To cover planned expenses or save for planned expenses

If you have planned expenses that are important, or you have pre-planned future expenses, then home equity can be a good source of finance for such expenses.