What does refinancing your home mean?
When you decide to refinance your home, you are replacing your current mortgage with a new one. Your current lender will payout your current mortgage and you will have a chance to get a new mortgage, either with the same or a different lender.
Have you considered refinancing your home?
About one in six people with mortgages have refinanced this year! Unfortunately, too many picked the wrong financing.
Whether your end goal is to pay off your credit cards, do renovations, score a better interest rate, send the kids to school, buy a car or take a vacation, refinancing can do a lot to help ease the financial burden of homeownership. However, when it comes to refinancing your home, it’s important to make an informed decision.
How much will it cost you to refinance?
Refinancing isn’t always cheap and they often involve penalties, so therefore it is very important to choose the right mortgage from the get-go.
When you refinance, you’ll be expected to pay closing costs on your loan. The fees needed to close out your old mortgage and begin your new one. They'll vary depending on where you live and the lender you choose.
Here is an example: A couple who bought a house get a divorce and break their mortgage during the course of the five-year fixed mortgage term. Forced to sell the home, if one of them can't pay the mortgage they will end up paying a large penalty on the balance. As and example $500,000 mortgage could be thousands right off the top!
On a variable mortgage: it will be only 3 months of interest!
An appraisal is a document that gives an estimate of a property's fair market value. When you refinance your home, your lender before loan approval, will want to ensure that the mortgage loan amount is not more than the value of the property as you are not allowed to refinance more than 80% of the value of the house. The final number may be higher or lower than what you originally paid for the house.
Your real estate lawyer will have to conduct a new title search, to make sure both you and your lender are protected. Then he or she will register your new mortgage amount and facilitate the rest of the financial transaction
Refinancing a home can feel complicated, but it can be seriously advantageous, too! If you are thinking about it, don’t hesitate to contact me to discuss. In the end, the most important thing is to make an informed decision!
Michael Brooks, from Momentum Mortgage says more people than ever are refinancing now a days!