The Mortgage Refinance Process Explained

Mortgage Refinancing Krishna Menon 17 Jul

Mortgage refinance is a process through which a person can change the terms and scheme of their plan. This can be done at any point during the term of the mortgage. There are three reasons to consider refinance:
• Take advantage of low rates
• To consolidate debt and change your financial status
• To access and use the equity present in your home
The reasons above can be very lucrative, but it is wise to consider how and why you are doing mortgage refinance before you go ahead with it. It is also important to know the process for the same. The process involves:
1. Decide the purpose: It is very important to know why you are considering a mortgage refinance. Whether it is to take advantage of low rates, or make your debt less or use equity, you should be well aware of the reason you want to consider this option. It will be the deciding factor for how your new plan would be formed. It would be an integral aspect in what factors would influence your choice of the new plan.
2. Browse your options: This step requires you to shop around and find the best plan for your needs. Mortgage refinance is a complex process and the shopping can take a lot of time and can involve talking to a lot of lenders. This can take up a lot of your precious time, but it is a particularly important step. You can enlist the help of a mortgage broker to help you out and expose you to different rates. Brokers make it easy.
3. Finalize the plan: After you have compared and calculated which new plan could give you the most benefits, it’s time to finalize the plan and make sure that you are happy with it. It is vital to make sure that you are not losing out on your dollars by taking this plan. Mortgage refinance requires you to calculate and understand your benefits. Once you are through with that, you can finalize the plan.
4. Fulfill the requirements: After you have finalized the plan, your lender will have certain checks to make before he signs off on you. He might require you to submit a copy of your income statement or your credit report. Keep all your documents ready and up to date. Some lenders may also require you to get your home appraised. If so, you will need to get a house appraisal and submit the result to your lender.
5. Sign and complete: After all the checks are made, you will be given a contract to sign on and complete the process legally. Read the terms and conditions carefully and ensure that you are aware of the costs involved and how you will be paying them. You can take the help of your broker or a lawyer to help you through the process. Make sure you are thorough with the document. You can then sign and enjoy the benefits of the mortgage refinance loan.

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.

Important details of Mortgage Refinancing

Mortgage Refinancing Krishna Menon 26 Mar

Some mistake mortgage refinancing for a second mortgage, however, they are not the same. A second mortgage is notwithstanding your first mortgage and does not supplant it. Mortgage refinancing will give new cash to the borrower, and used to pay off the first mortgage, as a rule with better mortgage terms.

A mortgage is a loan utilized by land or real state. They’re accessible by means of banks, credit associations, and online loan specialists. Many billions of dollars’ worth of mortgage loans are given each year. But, mortgages aren’t one-measure fits-all. Mortgages can be altered.

Advantages of Mortgage Refinancing

Didn’t get the mortgage procedure right the first run through around? A refinancing can fix a terrible mortgage arrangement and enable you to get the best mortgage terms.

Lower Interest Rate
The chance to acquire a lower financing cost is the best motivation to renegotiate a mortgage loan. For desperate property holders, it’s an answer that can keep them in their home and save their credit, as a renegotiate cannot just lower the financing cost on a mortgage loan, yet in addition the mortgage installment.
Convert an Adjustable Rate Mortgage to a Fixed Rate
Customizable rate mortgages (ARM) ordinarily include bring down rates for the initial couple of years of the mortgage term than fix rate mortgages, which is the reason they’re a mainstream decision among some home purchasers. For instance, you could have an ARM with a settled time of one year or ten years, amid which time the loan fee won’t change. In any case, the loan cost shifts when the underlying settled period terminates.

Disadvantages of Mortgage Refinancing

Applying for a New Mortgage
You may energetically apply for a renegotiate with the expectations of bringing down your mortgage rate and sparing cash on your home loan every month. Be that as it may, if there’s been any change to your salary or credit since applying for your unique mortgage, this can stop a refinancing in its tracks.

Refinancing Costs
The cost of another loan is one of the greatest obstacles to refinancing. A few property holders are found napping when they’re required to pay shutting costs, which run in the vicinity of 3% and 6% of the loan adjusted. Expenses incorporate the home examination, the application charge, the title look, the credit report charge, rebate focuses, and the loan start expense.

Low-Ball Appraisal
Home evaluations gauge a property’s worth, and they are inescapable while mortgage refinancing. The appraiser utilizes late tantamount deals in the group to evaluate a home’s estimation, and the consequences of an examination can represent the moment of truth the arrangement.

When Is The Right Time to Refinance Your Home?

Mortgage Refinancing Krishna Menon 25 Sep

You could be asking yourself if now is the right time to refinance your home. First you need to know whether or not it’s in your best interest to do so, and then figure out what type of refinancing is right for you.

Types of Refinancing

There are two types of refinancing you can consider:

If you’re looking to save money then you might want to consider refinancing your rate and term. This means that you’d refinance the remaining principal of your mortgage loan while decreasing your interest rate, as well as the term of your mortgage. This can make your mortgage more affordable.
Now, if you have existing debts and this is the main reason that you’re considering a refinance then you will want to go with a cash-out refinance. In doing so, you’ll get an entirely new mortgage for a larger amount than you currently owe on your existing mortgage. The difference in cash, you enable you to pay off your debts.

If you have an adjustable-rate mortgage with a fixed-rate loan, you’re going through a divorce settlement or your want to eliminate your mortgage loan insurance, then refinancing may also be the right choice and decision for you.

Is Refinancing In Your Best Interest?

Most people don’t just refinance with a goal of breaking even, as closing costs add up into the thousands. Therefore, you need to work with your mortgage broker to determine whether it makes sense for you to refinance. They can help you to calculate your closing costs, the point at which you’d break even, and how long it will take for the refinance to itself off. This is what will be the determining factor as to whether or not it’s worth it for you.

If you’re not planning to stay in your home long enough to break even and then some, then you should probably consider not refinancing.

Refinancing Your Rate & Term

When you refinance you need to pay particular attention to the term you are refinancing for. Although you can definitely save over the life of the new loan, a longer term can end up costing you more in the long run. So make sure that you don’t only focus on a lower interest rate.

If you’ve improved your credit since you got your original mortgage loan then this can also work in your favor to get you a rate and term that you’re happy with.

Cash-out Refinancing

While cash-out refinance comes with many advantages, it also has some disadvantages. For instance, if you use this type of refinancing to pay down your debt you’re also reducing the interest rate on that debt. On the downside, you may be actually paying more interest than you think if you’re taking a longer time to pay of the balance you owe. This is because you’ve basically transferred your debt to your mortgage and your mortgage may come with a longer term.

The biggest risk involved with cash-out refinances is that you’re turning your unsecured debt into secured debt. It’s one thing to miss a payment or two on your credit card, and see the affects it has on your credit, but it’s a whole other ballgame when you miss a mortgage payment or two. This could result in losing the home you live in and your home going into foreclosure.

But the biggest risk in this scenario is in converting an unsecured debt into a secured debt. Miss your credit card payments, and you get nasty calls from debt collectors and a lower credit score.

Miss mortgage payments, and you can lose your home to foreclosure. Home equity debt that’s added to the refinanced mortgage always was secured debt.

Consider your options carefully before deciding which type of refinance you’d like to go with. When in doubt ask your mortgage broker, they’ll guide you in the right direction, since they know you best.

Financing Options for Homeowner Hoping to Renovate Their Homes

Mortgage Refinancing Krishna Menon 18 Jul

You may be looking to become more energy efficient and save money on your monthly utility bills, expand your family, improve your family’s safety or your home’s resale value, or just give your home a facelift. Whatever your reason for your home renovation, know there are many financial options available to help you finance it.

Before You Start

If you’re considering borrow money to finance your reno, it may be a good idea to speak to a mortgage broker first. You need to fully understand your options in order to know how much you can borrow based on a loan pre-approval. Otherwise your financial plan may not be very realistic.

Exploring All of Your Options

It’s extremely important that you explore every single one of your options before making a sound final decision with your finances for your home renovation. Here are a few options to consider:

Self-fund your project. If you’re working on a smaller renovation project, then you may have the financial ability to cover your own costs for materials and labour.
Use credit. Another option for smaller renos if you don’t have cash on hand, is to use your available credit to cover costs. However, since interest rates are usually high, you should also have a payment plan in place if you decide to take this route, otherwise it could result in negative impacts to your credit history.
Get a personal loan. Bigger renovation project may require a longer period of time in order for you pay it off. If this is the case you can get a personal loan and make monthly payments on the principal amount, plus interest, over a one to five-year term. This is definitely a better route to take than using credit, as interest rates are typically lower.
Apply for a personal line of credit. When financing an ongoing or long-term renovation, this is probably the best option for you. You’ll have access to the money you need when you need it. You’ll also receive monthly statements, so it’ll be easier to keep track of your spending for better budgeting. The best part is that a line of credit also has a lower interest rate when compared to credit cards. You’re only charged interest on the funds you use on a monthly basis..
Apply for a home equity loan. With this type of financinh you’ll get all of the same advantages that come with a personal line of credit. The only difference is they’ll be secured by the equity in your home. They are very popular due to the fact they are more economical, as they offer better interest rates. They also enable you to borrow up to 80 percent of your home’s value.
Refinance your mortgage. If you’re undergoing a major renovation, then refinancing is probably the best option for you. You’re given a longer period to repay with lower interest rates, when compared to both credit and personal loans. Similar to a home equity loan, you can borrow up to 80% of the appraised value of your home
Finance your renovation at the time of purchase. If you’re buying a fixer-upper then consider the many advantages of financing when you purchase. This will allow you to the estimated costs of your renovation to your mortgage.

Are you considering a home renovation? Speak to a mortgage expert today to explore your options further.

Mortgage Refinancing: Know Your Costs

Mortgage Refinancing Krishna Menon 25 May

One of the biggest reasons that most homeowner consider refinancing is simply to get a lower interest rate. The second is to gain access to their home equity. Although refinancing your home can be a great financial decision it’s not for everyone. You need to know the costs associated with it to ensure it’s right for you.

If you do decide to refinance you’ll be able to access up to 80 percent of the value of your home, minus whatever outstanding balance you may have on your existing mortgage.
Refinancing Options
When it comes to refinancing options you have two options to choose from:

1. Refinancing within your term – to access a lower mortgage rate or gain access to your home’s equity
2. Refinancing at the end of your term – access equity only, since you’re already get a lower interest rate

Regardless of the option you choose, there are many fees that will come up throughout the refinancing process.

Let’s discuss potential fees that you might have to pay in certain circumstances.
Potential Fees
If you’re refinancing within your term and switching lenders at the same time, here are a few costs that you can be facing:

● Mortgage prepayment penalty
● Discharge fees
● Registration fees for your mortgage
● Legal fees (standard mortgages or collateral mortgages)

If you’re refinancing within your term, but staying with the same lender then only a mortgage prepayment penalty, registration fees and standard mortgage legal fees would apply.

When refinancing at the end of your term and leaving your current lender, here are the costs you could be expecting to pay:

● Mortgage discharge fee
● Registration fee
● Legal fees (standard mortgages or collateral mortgages)

When remaining with the same lender, you’d only have to pay the registration fee and legal fees for a standard mortgage.

So, as you can see refinancing at the end of your term is the best option if you want to avoid any prepayment penalties.

Now, let’s break it down by fee to give you a better understanding of each on individually.
Mortgage Prepayment Penalties
Going with a refinancing option that requires you to break your mortgage within your term? You will pay a prepayment penalty, along with the other fees described above. However, be prepared to pay either three months’ interest or the interest rate differential (IRD), whichever is greater, if you have a fixed-rate mortgage. With variable-rate mortgages you’d just pay three months’ interest.
Discharge Fees
To switch lenders and discharge from your current lender, you’ll be required to pay a fee. These rate can vary depending on your province and the lender themself. You could be looking at paying a minimum of $200, up to a maximum of $350.
Registration Fees
You’ll have to pay registration fees no matter what, whether you choose to stay with or leave your current lender. This registration fee is to cover the cost that is associated with removing your mortgage amount from your property title in order to register it with your new mortgage. These fees are set out by the government within your province and are usually around $70.
Legal Fees
Refinancing requires you to speak to a lawyer who specializes in real estate. They will facilitate the whole financial transaction for you and work with your lender. This includes reviewing your mortgage, terms and conditions, handle your new mortgage registration and do a title search of your home or property to ensure there are no outstanding liens. This could cost you anywhere between $700 and $1000.

However, if you’re going to a new lender with a balance on your mortgage of more than $200,000, it’s likely that the new lender may cover these costs. In this case you wouldn’t have to worry about paying them yourself.

Smart Decisions: Why You Should Refinance Your Mortgage?

Mortgage Refinancing Krishna Menon 10 Apr

Just because you already have your mortgage setup doesn’t mean you should just leave it at that. You should always consider if you’re getting the best possible rate and term, especially when your mortgage is up for renewal. So, are you getting the best deal?

You Don’t Have to Wait for Renewal to Refinance

It’s not necessary to wait until maturity though. Refinancing your mortgage at any time can lead to substantial savings throughout the years to come, even with any penalties your lender may charge you for these changes.

How Refinancing Can Help with Debt and Interest Reduction?

If you refinance you can gain access to your home equity, reduce your debt, support life-changing events or finance that home renovation you’ve been dreaming about. The best part, you can do this all at a lower interest rate. The worse thing that can happen in situations like these is missing your mortgage or debt payments due to your inability to manage, thus negatively impacting your credit score.

Having a significant amount of debt can become quite stressful and difficult to manage. At least 10 percent of Canadians choose mortgage refinancing as the best mortgage solution for them, and one of the main reasons was to consolidate debt. You can opt-out by refinancing and this can help to relieve that stress. You’ll then be able to replace your existing mortgage with a new one, that’s most often larger as well. As the borrower, you can can gain access to the difference up to 85 percent, which is a great strategy to reduce debt in Canada.

The Next Steps Towards Refinancing

Research is the next step towards refinancing. You’ll need to determine what the principal balance is on your existing home mortgage. This way you’ll be able to compare it to recent house sales in your area. The average sales price of other homes in your neighborhood can be used as a general indication for your home value as well. So, long as you own more than 20 percent of your home, refinancing could be the way to go.

The second step here is to get your credit into tip-top shape, although you can still refinance with poor credit. Better credit works for you in achieving a better rate.

Next, you’ll need to get all of your documents together, including:

Mortgage statements
Property tax assessments
A letter from your employer
Pay stubs
Income tax notice of assessment (last 2 years)

Once you’ve gathered all the required documents, then you can focus on learning more about your penalties, new term, new rate and potential savings. Calculating penalties and savings can be complicated since penalties and savings will vary by lender. Your mortgage broker can work with your lender to provide you with these figures.

Don’t wait for renewal to do what’s best for you in the long term, talk to a mortgage professional to find out about low-interest options that alleviate your financial stress and offer you financial freedom down the road.