Mortgage Blog

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Is refinancing right for me?

May 20, 2021 | Posted by: Ask Ana Cruz

To continue with our discussion last week about your options at mortgage renewal time….today we are going to refinancing. 

 

You have two options, you can either Refinancing at any time  or you can Refinance at the end of your term 

 

When you refinance you are able to change anything and everything about your mortgage, for example:

  •  Increase the mortgage amount - this is the most common reason for refinancing on renewal. This option is usually utilized to help access equity from the home.  Equity being the value you have in the house that you can borrow against without having to sell your home. These funds can be used for most anything but typically I find that they are used to, pay down high interest debt, to complete home renovations or upgrades, purchase high ticket items such as a new car that may have a higher interest rate, and numerous other reason

 

  • Change your amortization - This options is great for those who want to reduce their monthly payments and want to stretch the amortization out to 25-30 years which in turns normally lowers monthly payments.I have seen clients take this option for a number of reason, however it’s normally tied to increasing monthly cashflow.

 

  • To add a Line of Credit - This is becoming increasingly popular especially for those that have plans to use the equity in their homes over the next 5 years but don’t know the exact date. This allows you increase your mortgage amount however borrow those additional funds in a like of credit so that they are there for future use. Basically having funds available but not paying a monthly payment until you use them- sort of like your credit card or personal line of credit. We have noticed some of the reasons our clients do this is to secure funds for children’s education, future home renovations even planning for a possible purchase of a new home and using the line of credit for the deposit on the new property. Again there are a number of reasons. If you want to know if this option is right for you - connect with us and we will work it out together.

 

Title Change- this reason for refinancing is not as common, however it does come up and every situation is different. The most common is when a parent has co-signed for the purchase of a home and at renewal we are removing them from title. 

 

If you refinance at the end of your term, this means you have made it to the ned of the term and your commitment is complete thus no penalty charge from your lender. 

If you chose to refinance during your commited term you will have a penalty to pay with your lender (don't worry, we can help navigate and figure out what that amount will be)

So if this is the option you are leaning to, lets review the numbers and make sure it makes sense for you to do so. If you want to discuss your options or have any questions then let’s connect and I’m happy to work out your best scenario. 

 

Until next time - don’t forget to follow us on instagram and facebook @askanacruz  and like and comment and we will see you next week. 

 

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