Are you struggling to repay your house renovation loan or other home loans? If you want to lower your monthly mortgage payments, bring the interest rates down, or you want to switch to a cheaper, fixed-rate loan, you must consider mortgage refinancing. But before you proceed with the refinancing, make sure you understand what mortgage refinancing is all about, and how does the process work? See each case is different and, therefore, you must also weigh the pros & cons of refinancing for your particular situation. For example, most homeowners aren’t actually aware of the amount of paperwork that needs to be done in order to get approval for home renovation loan or mortgage refinancing. They don’t really know that there are some great options that require the least documentation.
Hence, it is important that you do your homework well and take your own good time to understand what home mortgage refinancing is and how will it help achieve your goals of giving a new lease of life to your home? Once you have all the knowledge, decision-making will be much easier and smoother. You can, then, search and compare the available options for mortgaging and choose the one that makes complete sense to your purpose and goal.
Simply put, mortgage refinancing refers to the process of re-mortgaging or putting an existing mortgage in exchange for a new loan. People, most typically, consider mortgage refinancing to cut their monthly loan repayments, reduce their interest rates, and choose another loan program. In this process, a fresh loan is taken out in order to pay off your old/actual mortgage loan. In several cases, homeowners consider refinancing to capitalize on the lower interest rates prevalent in the market, reduce their monthly payments, or cash out their equity’s portion. Mortgage refinancing lets the homeowners pay in full their prior mortgage amount by securing a fresh loan. This new loan has a different interest rate and its own terms compared to the original one, as per the definition of the Canadian Mortgage and Housing Corporation (CMHC).
Before you proceed with mortgage refinancing, I would advise you to consider the following:
A. Is the current rate of interest at least 1% lower than what you are already paying?
B. Do you intend to stay in your home for the next five or more years?
If you get a YES for these, then probably it is a good idea to refinance your mortgage or house renovation loan otherwise you must think again! If you are still not sure about whether you should refinance your mortgage or not, contact RateGuru for assistance!
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