4 Conditions to Refinance a Mortgage in 2021

Refinancing Faizal Garasia 20 May

Your monthly mortgage is about to end but you like to finish your repayments sooner. Investigating a few methods to accomplish this led you to the subject of refinancing your mortgage. Initially, you had doubts regarding this method. For starters, you haven’t entirely finished paying off your initial mortgage. The second concern is you’re not certain if your current lender would even allow you to refinance your active mortgage. Lastly, your finances might become compromised because of mortgage refinancing requisites.

You’re now at the crossroads in reaching a decision: will you or won’t you consider mortgage refinancing as your way out in fulfilling your loan obligation? This article will outline reasons regarding this method as your best way to get a second mortgage most especially if you’re a first-time mortgagor.

Mortgage Refinancing Defined

The following are conditions you should consider if you’re inclined to refinance your mortgage. Take note, however, doing this might expose your finances to greater strain since you’ll be forced to pay off your initial mortgage before being granted refinancing. If this happens, you might end up with a credit loss leading lenders to brand you as an investment risk.

You should do everything to avoid this scenario because carrying a bad credit mortgage refinancing issue will spell disaster for your future plans. You won’t get approved easily and your property might end up getting foreclosed by your lenders.

These are the reasons for refinancing your mortgage:

a. Shorten the loan’s term – when interest rates fall below your original lender’s offer, it only makes perfect sense to refinance your mortgage at the newer, lower interest rate for a shorter loan term.

b. Secure a lower interest rate – winning a lower interest rate might be your best reason to refinance your mortgage. Your chance of repaying your obligations faster in a more relaxed manner is possible. You can save even end up saving money because your monthly amortization is much lesser in value.

c. Convert to fixed-rate mortgage – interest hikes occur for a number of reasons and if this happens during your mortgage term, you may opt to have your loan type converted into a fixed-rate mortgage loan. This is beneficial most especially if you started out with an ARM loan type. While it is true that ARMs initially roll out with a lower interest rate, the fluctuations in the market and the economy will affect your current interest rate.

Adjustments are inevitable and, regardless of the small increments made, will eventually lead to having an increasing interest value. Changing your loan classification from ARM to fixed-rate mortgage will save you money because there will be no interest rate hike effected on your loan even if the market fluctuates unpredictably.

d. Tap equity or consolidate debt – you might need additional sources of funds to support other needs like your child’s education, house renovation, or settlement of another outstanding obligation. Whatever reason you have, tapping your mortgage for equity or refinancing your loan for consolidating your debt is a risk to avoid as much as possible. The prospect of getting burdened with more debt is greater and you might fall into a debt trap instead. It is suggested that you speak with refinance mortgage lenders about this step before making a decision.

Final Thoughts

Seeking mortgage refinancing is not a bad idea if you’re planning to save money on your mortgage plan. However, proceed with caution because market factors could affect your decision. Give importance to your financial standing before taking the opportunity for a mortgage refinance. Don’t create excuses in non-payment of your outstanding obligations and never use your current mortgage as bait to leverage yourself against your lenders. Be diligent with your monthly amortization settlement and you’ll be over with your mortgage loan sooner than you think.

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We are your best mortgage solutions provider in Canada founded by Faizal Garasia in 2019. We have a network of more than 90 lenders including the largest banks, credit unions, trust firms, and financial institutions across Canada.
Contact us at (416) 825 0142 or send an email to faizal.garasia@dominionlending.ca today for more information.

Refinance with Current Lender: Yes or No

Refinancing Faizal Garasia 18 Mar

Choosing to refinance with your current lender may help you simplify the process and save you time. However, there are numerous factors that you need to consider before you make this decision. It is a smart idea to shop around for multiple lenders to get the most favorable deal for you.

In this article, we will discuss if you should refinance your mortgage with the same lender or not.

Refinance Defined

Refinancing is the process where the current mortgage is replaced by a new one that pays off the balance of the previous one. When you refinance, you basically change the term of your mortgage with a more affordable interest rate.

Refinancing is available for home mortgage, auto loan, insurance, and any other types of transactions involving the borrowing of money. You have the option to do this if you feel that your existing mortgage is too expensive and need additional capital to settle your amortization on time.

Or maybe you have lost or changed jobs which affected your financial condition. By refinancing your mortgage, you can adjust the term that suits your current economic circumstances.

This being said, the best time to refinance your mortgage is when your finances are good, your credit score is high, and your credit reputation with lenders/creditors is laudable.

Is It Better to Refinance with the Same Lender or Not?

“Which one is better?” you might be asking yourself.

The answer depends entirely on your current monetary situation. Speak with different lenders/creditors and check which deals match your financial status at the moment.

Another matter to consider on whether to continue with your current lender or not is current rates for mortgages . Choosing a new one will provide you with rates that are at fair market value compared to your previous one who can give you some privileges since you are a loyal customer.

Advantages of Refinancing with Your Current Lender

Here are some of the benefits of working with your current lender:

• Lower fees– if your lender wants to keep you as a client, he/she will give you the best deal to keep you in business. You may be able to negotiate the interest rate and terms with them plus they may reward you for being a loyal client.
• Shorter timeline– The process is usually faster when you work with your current lender. They have all the documents to process your application so you can close the deal faster.
• Easy communication and established relationship– This makes the entire process easier and smooth.

Disadvantages of Refinancing with Your Current Lender

Working with the same lender does not t mean you have all the advantages your lender is willing to offer you.

You need to consider a few things before leaving your current lender in lieu of a new one and these are:
• You may need to rate-shop- you want to prove to your current lender that you are serious about getting the best deal, so you may need to provide estimates from other lenders.
• You may not get the best deal offer- not all the lenders will give you the best deal that they have because they know what your current rate is, so it holds the upper hand.

Either leaving your current lender or not carries risks that you have to weigh considerably to get the best rates available from your creditors.

Compare the mortgage plan you will receive between your current and chosen new lender and then proceed from there.

When to Refinance Your Mortgage

If your current interest rate is higher than the current rates for mortgages then refinancing is a smart idea. If, on the other hand, your financial situation has adjusted and you can’t afford to pay your current rate then it is time to refinance your mortgage to get the most ideal interest rate available for you.

Final Thoughts

Refinancing your mortgage may sound easy but it is actually not. Your goal is to get a lower interest rate and save money which is the reason behind your mortgage refinancing.

Do not take the first refinancing offer you get; instead, shop around and compare the different mortgage packages offered to you. Choose a lender that provides the most favorable interest rate and terms.

Remember that you have a choice and it is your present financial status that will dictate your refinancing decision even if it means replacing your current lender with a new one.

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We are your trusted mortgage solutions experts based in Canada founded by Faizal Garasia in 2019. We have access to more than 90 lenders including the largest banks, credit unions, trust firms, and financial institutions across Canada.

We help you understand and resolve issues regarding mortgages, finances, taxes, and other loan-related payments that impact your real estate plans.

Contact us at (416) 825 0142 or send an email to faizal.garasia@dominionlending.ca today for more information.