Thinking of Refinancing Your Home? Here's What You Need to Know...
Property values have been surging in the residential real estate market, meaning refinancing your real estate assets might be an attractive option for you - especially if you've owned one or more properties for a significant amount of time.
But why would you want to refinance? Let's take a closer look at the benefits:
Securing a Lower Interest Rate
Refinancing to secure a lower interest rate could save you quite a bit of money over time, however, it depends on the terms of your current mortgage. Most loans include penalties relating to specific clauses and conditions, such as early terminations etc. These penalties are usually correlated to the amount of time remaining in the term of your mortgage. If you terminate a mortgage contract after only 1 year into a 5 year term, the penalty will be much greater than if you do so after 4 years. However, don't let penalties scare you. Take the time to understand the numbers and run the proper calculations. You may find that the penalty is worth paying because you’ll end up saving money in the long-run by refinancing or by switching lenders.
Unlock Equity in Your Home
Refinancing your home allows you to access the equity you've built up over time. Typically, banks will lend you up to 80% of your home's current value. You could use that extra cash for home renovations, investment opportunities such as purchasing a rental property, or even your child's education. There are many ways to access your equity, including breaking your mortgage, taking on a home equity line of credit (HELOC), or blending and extending your mortgage with your current lender.
If you have enough equity in your home, you could use this money to pay off high-interest creditors. For instance, if you have several outstanding debts, such as a car loan, a personal line of credit, or credit card bills, you can consolidate these using various refinancing options.
Different Mortgage Options
Have your needs changed? Maybe you want to pay off your mortgage faster or explore different financing options. Did you just inherit some money and want to put it towards your home’s equity? Did you recently lose your job and need to put your monthly payments temporarily on hold? You might want to switch to a loan that offers more prepayment privileges, like an open mortgage, or find a lender that offers “Mortgage Vacations” where you can defer payments for a short period of time.
Although there are many great benefits to refinancing and tapping into your home's equity, remember that your mortgage payments will increase and you'll have to afford the higher payments each month. So, if your goal is to keep payments low and be mortgage-free... don't refinance! However, if you think that tapping into your home’s equity is something that you may want to consider… the first step is to have your home evaluated by a realtor in order to determine its current market value. The next step would be to figure out what type of financing would be best for your situation.
If you're looking for a professional team with years of experience, don't hesitate to contact Team Broady today. We can not only help you determine your home's value, but also refer you to a selection of trusted lenders. Give us a call at 514-613-2988 or email us at email@example.com