Why would you want to refinance your home???
There are many reasons why you might want to refinance: the opportunity to obtain a lower interest rate; the chance to shorten the term of their mortgage or increase your existing mortgage; to consolidate debt; to finance improvements to your home, kids college tuition; or investing for retirement. There are many different strategies and even more different products that can help you reach your goals.
At Best Mortgages Vancouver we:
- guide you through the process
- help you decide which strategy to follow
- reach your goals with mortgage products
To get started, complete our on-line application or to have one of our Best Mortgages Vancouver Specialists give you a call complete this quick contact form or call us at 604-961-2400.
Securing a Lower Interest Rate
One of the best reasons to refinance is to lower the interest rate on your existing loan. Historically, the rule of thumb was that it was worth the money to refinance if you could reduce your interest rate by at least 2%. Today, many lenders say 1% savings is enough incentive to refinance.
Reducing your interest rate not only helps you save money, but can decrease the size of your monthly payment. For example, if you have a $100,000 mortgage that is being paid off over 25 years with an interest rate of 6.5% your monthly payment for principal and interest payment is $669.82. That same loan at 4.5% reduces your payment to $553.47 a saving of over $115 per month.
Shortening the Loan’s Term
Now if your goal is to get your mortgage paid off sooner here’s something to look at! When interest rates fall, why not just keep your payments the same as when you had the higher interest rate. Your monthly budget remains the same but your mortgage will get paid off sooner.
Using the above example if you had the$100,000 mortgage but kept your monthly payments at $669.82 you would have your mortgage paid off in just over 18 years and would have saved more than $54,000 in interest charges.
Most unsecured debt is priced by your bank at a higher rate than your mortgage, in order to compensate them for the higher risk of loss if you default. For many people it only makes sense to use available home equity to pay out this debt, as it typically reduces interest costs significantly.
Debt Consolidation can help you to:
- decrease credit card debt and interest
- simplify monthly finances
- avoid filing bankruptcy
- lower and consolidate monthly payments
- eliminate late charges and over limit fees
- help manage and improve credit rating
- eliminate creditor harassment
Here’s an example of how consolidating your debt can help you save money, reduce your monthly payments and give you an opportunity to get your mortgage paid off sooner:
Before Debt Consolidation
After Debt Consolidation
|Existing Mortgage||New Mortgage|
|Monthly Payments||New Monthly Payments|
|Credit Cards ($10,000)||
|Car Loan ($12,000)||
|Other Debts ($3,000)||
|Total Monthly Payments||
|Total Monthly Payments||
By taking advantage of the equity in your home you could reduce your monthly payments by $654 in this example. And if you were to take even a small portion of this amount and apply it against your mortgage you will be able to get your mortgage paid off sooner as well!
Your next step…
In order to take advantage of this program you must be a home owner and have at least 10% equity or more in your home. If you have any concerns or questions please include them in the application/comments section or email us directly.
Is debt consolidation right for you? First calculate your total monthly debt payments. Include all loans, lines of credit, credit cards and your mortgage. Take that amount and divide it by your gross total monthly income. If the number is higher than 0.50 then you may want to get started on a refinancing right away. If you are below 0.50 we can still help save you money.
Fill out our Online Approval Application and let us do the work for you.
The Cost Of Refinancing
When you refinance, you pay off an existing mortgage and take out a new one. An important factor in deciding if you should refinance your mortgage, is understanding just what’s involved in the process, as well as the costs and fees you’ll have to pay. When you refinance, you generally will repeat many of the same steps, provide the same information, and encounter the same types of costs that were involved the first time around. Of course we will be there to help you each step of the way.
Here’s a list of fees generally involved in refinancing:
- Appraisal Fee
This fee pays for a professional appraiser to estimate the market value of the property. The appraiser looks at what the home is worth today and how the neighborhood may affect future property value.
- Legal Services
You may be charged for fees paid to a lawyer or company for conducting the closing.
- Prepayment Penalty
Many closed mortgages have the feature that allows the balance to be paid out with a penalty after a certain time has elapsed on the mortgage. Check the “prepayment” clause in your mortgage to determine your own situation, or better still, call your institution and ask them the cost of paying out in full.
- Survey Charge
There are instances where a survey of your property is ordered to ensure that nothing has changed about the land or its physical structures that would affect a future sale. As with everything else, you are responsible for the fee. If you had one from when you did your previous financing it will likely be possible to use this previous survey as long as no significant changes have been made to the structures.