Should You Refinance Your Mortgage Or Not?
2016-08-11 | 16:50:45
As I continuously strive to be the best mortgage broker in Edmonton I do what I can to provide my clients with as much knowledge as possible.
Many of my clients often approach me curious about refinancing their mortgage. They frequently wonder if they should refinance, what it requires and if it will benefit them. There are a few reasons why refinancing your current mortgage can benefit you in both the short and long run.
I’ve put together a few things for you to look at to help you better understand what refinancing is and whether or not it is something you may be interested in.
Get a shorter term and a lower interest rate
One of the biggest reasons why people refinance is for the opportunity to secure a lower interest rate than what they are currently paying as well as shortening the length of the mortgage’s term. If the benchmark interest rate is at least 1-2% lower than the one on your original mortgage, many expert believe that you can benefit from refinancing. By doing so you will obviously get a lower rate but you also have the chance to lower your monthly payments.
Additionally, you have the chance to shorten the length of your mortgage by choosing to refinance. This ties into obtaining lower rates because if you can acquire a lower rate you’ll also be able to get a shorter term without having to pay more for your monthly payments.
Consolidate some of your debt
Another reason people opt to refinance a mortgage is pay off current debts. The driving force behind this is that it makes more sense to pay off debt that you currently owe and has a high interest rate by using a mortgage that has a lower rate of interest. Instead of paying a high amount over time just in interest expenses alone on a debt, people are able to pay using their mortgage’s interest rate which can save them money long-term.
Switch your rate type
There is really two main types of rates that people have with their mortgage: a fixed-rate and an adjustable-rate. Simply put, a fixed-rate has a rate that is set and will not change for the duration of your mortgage’s term whereas an adjustable rate fluctuates based on the benchmark interest rates. Adjustable rates are popular if you believe rates will be lower than what you could get with a fixed-rate while a fixed-rate provides owners with the satisfaction of knowing they are paying a set amount every month and it will not change. An adjustable rate can be of benefit to those who are planning on selling their home in a few years as they can take advantage of low rates and lower monthly payments before they sell.
While consulting a mortgage broker in Edmonton like myself is the best way to get all of the information you need if you’re considering refinancing your mortgage, these three factors can help give you an idea of what you want to begin with.
For further reading about refinancing, check out this article: http://www.investopedia.com/articles/pf/05/033005.asp.
For all that you need to know about refinancing and for the best mortgage broker rates in Edmonton, contact me today!