Why you should refinance your mortgage

Posted in Home & Garden

Why you should refinance your mortgage

Refinancing a mortgage is something that all people think about after a while, because of the many benefits they can get. Of course, there are certain risks involved if you do not get your refinancing at the right time, but provided that your calculations show that you will reduce your interest rate with at least 2%, you should definitely go for it. Essentially, refinancing means that you will be paying off a loan and replacing it with a new one that offers you better conditions. A professional military mortgage broker in Canada can guide you through the application steps, but first these are the main reasons why you should apply for a refinance.


A lower interest rate


This is probably one of the most important reasons why you should try obtaining a refinance for your home. Generally it is recommended to apply for a refinance if you can reduce your interest rate with at least 2%. This way you will know for sure that you obtain a profit. By having a lower interest rate you can start to actually save money, decrease the size of your monthly payment and build home equity.


Converting between fixed-rate mortgages and adjustable-rate ones


Even though sometimes adjustable rates offer more advantages, they are also riskier, so many people prefer to switch to fixed rates. Of course, the other way around is also possible if you want to lower your rate.


Shorten your loan term


When you refinance your loan, you have the opportunity to shorten it considerably. For instance, should you have a 20 year loan, you can probably cut that loan into half and adjust your monthly payment only a little.


Consolidating debt and equity


Even though this could bring in a major advantage in the form of having a lower interest rate or by offering you the possibility to remodel your home, in this case prudence is very important. You really need to take into account if prolonging your loan is the best choice. Many people consider that by remodeling their home they are actually increasing its value and while this can be true, often times they are better off without consolidating they debt.


To conclude, refinancing can bring in many benefits, especially to those who want to reduce their monthly payments or reduce the number of years for their loan. One thing everyone should not overlook is to carefully asses their financial situation before applying for a refinance. Fortunately, there are many excellent brokers on the market, so those who are not very experienced in this field will find all the help they need. A professional military mortgage broker in Canada will know what needs to be done in every situation and offer his clients with competent advice and guidance. When you know you can make important saving if you choose to refinance your mortgage, you should definitely go for it. Most people have a mortgage these days and few things are more rewarding than knowing you will finish paying it sooner than you anticipated.