Make The Most Out Of Compiling Loans: Some Tips On Refinancing}

Submitted by: Bary Dawn

Refinancing is the act of getting another loan to replace an existing loan. Usually, this is employed so that borrowers who are on a high-interest-rate mortgage can take advantage of the lower rates of the current times. Considering the fact that any mortgage goes as long as thirty (30) years, it is not far-fetched to realize that interest rates then may not be the best mortgage rate Toronto residents or just about anyone can avail of today. With current rates reaching their ultimate lows, interest rates could really vary from at least a half to 2 points.

Because of this, it is a good idea to resort to refinancing – Thornhill or anywhere else. And for people who have been making a “habit” out of mortgages, the idea of taking one loan after another may not shake them. But for others, it is one decision that they don’t want to make. The thought of getting another loan to replace an existing one seems too stressful.

The good news is, refinancing need not be burdensome. This particular mortgage is created to provide breathing room for people who are attached to high-interest loans and take advantage of today’s lows. But mind you, refinancing is not for everyone. So before you rush to a lender and avail of this, make sure that you equip yourself with more than sufficient information on refinancing.

The Difference in Interest Rates

Refinancing would only make sense if the difference between the interest rate of your current loan and prevailing market rate is at least 2 percentage points. Make sure that this is the case; else, it would be better if you just stick with your existing loan.


Your Length of Stay

Experts are unanimous in saying that for you to feel the benefits refinancing, you need to stay in the house for at least three years. You would be lucky if you can recoup the costs of this type of mortgage at a shorter time. Still, it goes without saying that only when you plan to stay in that house longer shall the decision of refinancing make sense.

The Value of your Home

Because refinancing is a mortgage and any mortgage has to do with the value of your property, it makes sense then to check the value of your home once in a while. Before refinancing can make sense, you have to ensure that you have kept your borrowing at less than 80% of your home equity. Home equity is the monetary value of your house minus the debts and mortgages attached to it. If you have been constantly taking out your home equity, then refinancing would only make matters worse.

Length of Time on the Loan

When you have been paying the loan for a long time, say 25 years, then it would not make sense to take out another loan. Not only will doing so mean more costs, but such would also prolong your agony of having a debt on your roof, literally! So if there’s only 5 years left for you to pay off a mortgage, continue that, and don’t consider refinancing.

Refinancing is not a universal answer to your loans needs. Some people would benefit from it, while others won’t. So before you take your business to a refinancing lender, carefully evaluate your situation first.

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