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When is the right time to refinance?

If you are stressed about the amount of debts you have or mortgage payment amount(s) you are currently making, it may be time to look at refinancing your home as rates are still low and Edmonton has a stable housing market.  If you’re unsure if it makes financial sense to restructure your current mortgage, a review of your mortgage details could be warranted. Have a look at the questions below to determine if you should consult a mortgage professional about moving onto the next step in refinancing.

  1.  Is your mortgage up for renewal in the next 2 to 3 years?

If you’re about halfway into your mortgage term, it may be good idea to start thinking ahead. There have been rumblings of rate increases for a while now and no one is sure exactly when a continuing increase will begin, but we all know it’s coming. What I can say is rates are not expected to decrease any further, so if you are thinking you may break your term early anyways for one reason or another, look at your options sooner than later if your goal is to save money and keep payments low.

If you have decided to do a mortgage refinance to access some of your home equity, consolidate debts, or just to lower your payments, you may want to start out by speaking with your existing lender about an early renewal if you are close to your renewal date. Or, a blend and extend now versus waiting for your renewal date when the rates could be higher than they are now. Also doesn’t hurt to get a second opinion from another mortgage professional, separate from the one working with your existing lender, especially if you are thinking of making a major decision about your finances.

  1.  Are you planning on starting your own business anytime soon?

It can be difficult to qualify for a mortgage if you are newly self-employed. If you are planning on making some changes to your mortgage you may want to take action soon, while you are still an employee who can provide third party income confirmation. Accessing unused equity to use as a cushion while building your business, or restructuring your mortgage to lower payments could make sense if you are planning a major employment change. Be aware refinancing can come with some costs and your mortgage professional can advise how much you could potentially pay out of pocket.

If you are unable to make changes to your mortgage due to your employment situation, talk to an experienced mortgage professional who is able to offer other financing alternatives for self-employed borrowers.

  1.  Your Home Equity Line of Credit balance hasn’t decreased

If you have a line of credit that is secured by your home with a balance owing that is not going down, you may want to consider converting your revolving credit line into a fixed rate mortgage term while fixed rates are still low.  The rate may even be lower than what you’re presently paying and you will have a structured pay down of the debt with a fixed payment schedule.

  1.  Has your credit score increased?

If you were originally given a mortgage when your credit report was showing derogatory ratings and as a result you are paying a higher interest rate through an alternative lender, a mortgage refinance could be right up your alley. If you’ve improved your credit score enough to qualify for a lower interest rate, you could be saving money every month! It might be time to contact a mortgage professional for some valuable advice about moving to a prime lender for a lower interest rate and monthly payment.

  1.  Are you moving soon?

Most mortgages are portable, which means you can move your existing mortgage term to the new home you buy. If you are thinking of making a move in the near future, don’t worry if your mortgage is due for renewal soon, and refinance now if you want to. You are usually are able to bring the great terms you arrange now to the new property you buy. There are some guidelines that determine portability eligibility and it’s important to read the fine print on your mortgage commitment to determine what requirements you must meet in order to “port” your mortgage terms.

Some of the above information may lead to questions about possible payout penalties and if it is financially sound to still proceed with a mortgage refinance. Your mortgage professional can provide you with a few amortization scenarios that take into consideration a potential payout penalty to break your term and give you the facts and figures which will help you to make a decision. Start out by contacting your existing mortgage lender for a potential payout penalty estimate, do some research about what’s available in the mortgage market these days, and then call your mortgage pro for a discussion.

It doesn’t take long to determine if your mortgage is in need of a makeover and an experienced mortgage consultation makes sense if you answered yes to any of the above questions. Ensure you’re aware of what is involved in the process including costs involved and documents required. Before you commit to refinancing your mortgage, don’t be afraid to ask questions if you’re unsure of anything, a mortgage check-up is the perfect time to get the answers you’re looking for.

Do you have mortgage questions? Contact the Mortgagegirl at 780.433.8412 or info@mortgagegirl.ca. Stay in the loop by following on Twitter @mortgagegirlca.

 

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7 thoughts on “When is the right time to refinance?

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  4. Pingback: Self-Employed? |

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