Last week I wrote about potential avenues you could take to make changes to your existing mortgage. This week, I want to go into more detail about one of the options which is to refinance your existing mortgage. It is deemed to be a “mortgage refinance” any time you renegotiate the terms of your existing mortgage. You may want to increase the mortgage amount, change the amortization or to lower the interest rate or payment amount. If you are thinking of refinancing, here’s what to expect when you’re exploring your options.
Before you begin the process of refinancing you first need to clarify under your existing contract if you’re actually able to do so. When a borrower calls us about a refinance, we will ask some questions about your mortgage to determine the best refinance option for your specific situation and financial goals. You want to be able to make an informed and educated decision when making changes to the largest debt most of us will ever have in our lives.
Below are some frequently asked questions you will encounter when exploring your mortgage refinance options. Armed with the below information, your Mortgage Broker should be able to quickly find a mortgage solution that will best work for you:
1. Do you have a payout penalty?
If you’re breaking your mortgage term before the renewal date you may have to pay a penalty and you can find out what that amount is by contacting your current mortgage lender. The good news is you can add this payout penalty to your new mortgage refinance amount if there is sufficient equity available in your property.
2. Do you know the value of your property?
With the new mortgage rules implemented over the last couple of years, your property value is more important than ever as it can make the difference as to whether you have sufficient equity available to refinance your mortgage. A recent property tax assessment usually mailed out in January of each year will give you an idea of your approximate home value or you may be able to visit your city or county website and look under property assessments.
3. Do you have multiple mortgages?
We ask this as we need to know if your mortgage is the only charge registered against your property title. Let us know if you have a second mortgage or home equity line of credit even if there is no balance owing.
4. Can you qualify to support the new mortgage?
When refinancing your mortgage you are required to re-qualify based on your present financial circumstances. This means you will have to provide an updated mortgage application along with supporting documentation just as you did when you took out the original mortgage.
5. What’s your current lender offering you?
When refinancing your mortgage you can stay with your current lender or you can move to a new lender. It’s hard to say which is better for you until you know what your current mortgage lender is prepared to offer you. You will most likely hear the term “blended rate” as this is how you can avoid paying a penalty, however, do be aware this could result in locking in for a much higher rate than is otherwise available in the current market. Sometimes it makes sense to take the lower rate and pay the penalty.
6. Have you done the math?
Now that you’ve confirmed you’re eligible to refinance, it’s time to determine the best refinance route. Play with some online calculators, talk to some friends who’ve gone through the refinance process and then contact your favorite Mortgage Broker to design a mortgage refinance solution that is just right for you!
You can expect the whole refinance process to take about 2-3 weeks. As usual, every lender and borrower is different so there are exceptions to the norm. We’re in a changing mortgage market and being informed about the options available to you will save you money and time. Remember to ask about refinancing your mortgage for FREE as some lenders offer incentives for you to move your mortgage to them.
If you’re looking for a favorite Mortgage Broker, The MortgageGirls are here to help. Contact us at 780.433.8412 or email firstname.lastname@example.org. Stay in the loop by following us on Twitter @mortgagegirlca.