Why do people refinance?
When you refinance your mortgage, you are paying off your existing mortgage and replacing it with a new mortgage. There are a variety of reasons why homeowners choose to refinance their mortgage. These include lowering your payments by extending you amortization, or using your home’s equity for home improvements, beefing up savings, or consolidating high-interest debt.
How to know if refinancing is right for you
If you can save money by leveraging the low rates of a mortgage vs your high-interest debt, then it doesn’t hurt to see if refinancing is right for you. Many factors should play into your decision, such as how long you plan on living in your current home, current interest rates, and how long it will take to recoup your legal costs and potential penalties if you chose to break your existing term. It is important to evaluate the positives and negatives to make sure refinancing is right for you.
If you have owned your home for a long time and have built up equity it can make refinancing easier. However, if you are using that equity or consolidating debt as the reason to refinance you can increase the number of years you owe on your mortgage.
Refinancing your mortgage is a big decision and it’s important to familiarize yourself with its interest rate and terms before shopping for a new mortgage loan. Give our mortgage brokers a call to see if refinancing is right for you.