Refinancing
Refinancing is the act of obtaining a new loan on an existing asset. A homeowner may choose to refinance a mortgage in order to obtain more money, a better rate of interest or even different prepayment terms. Put simply, refinancing is trading in an old loan in exchange for a new loan.
When a homeowner wishes to refinance a home, they must apply for a new mortgage, which requires their home to undergo a new appraisal in order to determine its present value. During this application process, the homeowner will also have their credit score reviewed by the lender, who may also order a title report on the home in order to check for any other existing liens on the property. Once the lender is satisfied, they may then approve the new mortgage that will refinance the old home loan.
Spotlight on Refinancing
The Best Time to Refinance
The best time to refinance your home, vehicle or personal loan is a matter of debate. Some mortgage brokers would say the best time to refinance is when interest rates are lowest. Most lenders would say it makes the most sense to refinance when your credit score is the highest. On the other hand,... Continue Reading »
The Best Time to Refinance
The best time to refinance your home, vehicle or personal loan is a matter of debate. Some mortgage brokers would say the best time to refinance is when interest rates are lowest. Most lenders would say...
Divorce and Refinance
Many divorcing couples have joint debts. Law in most Canadian provinces states that if both spouses signed for the debt to begin with, both are still responsible legally for the full amount, even after ...
About Refinancing
Mortgage refinancing enables the homeowner to use the proceeds of the new loan to pay off the old first mortgage, as well as any liens or additional mortgages that were taken out on the home. As a result, the only mortgage which will show on the property once refinancing is complete is the new mortgage loan. One of the main reasons why a home owner would wish to refinance their home is if interest rates have fallen below the rate they had on their mortgage at the time of purchasing their home. For home owners with good credit, refinancing may be the best way to obtain a lower interest rate or event to convert a variable rate loan to a fixed rate loan. Refinancing allows a home owner to combine both a primary mortgage and a second mortgage into a new loan. One may also obtain a mortgage with a longer term which will enable them to reduce the amount they repay each month.
Before you decide to opt for refinancing, it is important to weigh the savings you will make in the long term, against the costs involved in the refinancing such as the refinance rates, and the period of time you intend to stay in your home. Other costs you may incur during refinancing include tax service fees, appraisal fees, document preparation fees, and title expenses and lenders costs. By doing this, you will be able to ensure that your decision to refinance is financially sound. However, if you are currently experiencing financial hardships and are burdened by debt or bad credit, refinancing may only serve to increase your financial problems.