Around this time of year, people are looking to save money wherever they can, including their mortgages. Some homeowners may be wondering if it’s time to refinance their mortgages to take advantage of lower rates.
There are many different reasons why you may want to refinance, or increase your existing mortgage:
The reasons can be endless.
If the interest rate savings on a refinance outweigh the cost of the prepayment penalty, then it might be worth pursuing a refinance. (Also keep in mind that you’d need to have built up at least 20 per cent equity as you can only refinance up to 80 per cent of the value of the home.) If you don’t have the cash now to cover prepayment penalties, you can roll that cost into your mortgage balance and reap the savings of a lower interest rate. [Huffington Post]
The cost to refinance your mortgage depends on the strategy you use to access equity or lower your interest rate. No matter which strategy you use, you will always incur legal costs as a lawyer must change the financing on title. [Rate Hub]
Before you begin the process you will first want to have your mortgage professional do a cost of borrowing analysis to find out first that what you are thinking of doing makes financial sense. If at the end of the day it cost you $1000 to save $500, does that really make sense? Proper advice, planning and a good solid strategy along with proactive and on going mortgage management are key here. Be sure to contact me if you have any questions at all. Alternatively, you can reach me on Twitter too.