A Mortgage Refinance is where the borrower takes out a new mortgage loan to pay off an existing one. There are many reasons why a borrower may want to exercise this option such as;

​

•  To obtain a better interest rate.

•  To shorten their mortgage term.

•  To transfer from a variable-rate mortgage to a fixed-rate or vice versa.

• To tap into home equity to raise funds to deal with a financial emergency, finance a large purchase, or consolidate debt.

​

​

REFINANCING TO SECURE A BETTER INTEREST RATE

A great rule to keep in mind when thinking of refinancing for a lower rate is if the new rate is 1-2% lower. Most Lenders say that even if the rate is lower by just 1%, it is enough of an incentive to refinance. Reducing your interest rate saves you money in the long run and it increases the speed you build equity in your investment. 

 

REFINANCING TO SHORTEN MORTGAGE TERM

Refinancing to shorten your mortgage term allows you to pay off your mortgage balance quicker, leading to you paying less interest than originally planned. To shorten your term, you would be increasing the monthly payment to pay off the loan faster.

 

REFINANCING TO A FIXED OR VARIABLE RATE

Variable Rate Mortgages often have lower interest rates than Fixed-Rate Mortgages, however, periodic rate increases tend to be higher than the Fixed-Rate Mortgage.

 

This allows the borrower to pay more interest in the monthly payment and less principal which may not be what you’re looking for. If a borrower is very risk-sensitive, the best option would be to convert to a Fixed-Rate Mortgage as the rate is fixed and remains constant throughout the term. Refinancing to change your rate to fit your financial plan is very common.

 

REFINANCING TO TAP EQUITY OR CONSOLIDATE DEBT

Refinancing to tap into the equity in your home is a great way to access funds to pay off a large expense/project, pay off bills or debt, and even use the funds to purchase an investment property. Many homeowners refinance to consolidate their debt. At face value, replacing high-interest debt with a low-interest mortgage is a good idea. However, this does not create financial prudence so it is important to know that borrowers know that they will have to keep a good track record after the debt is cleared. 

​

FOR MORE INFORMATION, CONTACT US USING THE FORM BELOW

​