Are you considering refinancing your mortgage? This can be a great way to save money on your monthly mortgage payments or access cash for home renovations or other expenses. However, refinancing is not always the best option for everyone. Here are some things to consider when refinancing your mortgage:
- Your Credit Score
Your credit score is one of the most important factors when it comes to refinancing. If your credit score has improved since you initially obtained your mortgage, you may be able to qualify for a lower interest rate, which can save you thousands of dollars over the life of your loan. On the other hand, if your credit score has gone down, you may not be able to get a better rate and refinancing may not be worth it.
- Your Current Interest Rate
If you have a high-interest rate on your current mortgage, refinancing may be a good option for you. However, if your current interest rate is already low, refinancing may not make financial sense. It’s essential to calculate the costs associated with refinancing and compare them with the savings you could potentially achieve.
- The Length of Your Loan
When refinancing, you can choose a new loan term that is different from your current one. For example, if you currently have a 25-year mortgage, you could refinance to a 30-year mortgage, which could save you money on your monthly payments. However, keep in mind that a longer loan term means it will take you longer to pay off your mortgage.
- Closing Costs
Just like when you first obtained your mortgage, refinancing comes with closing costs. These fees can add up and may make refinancing not worth it. Be sure to calculate the closing costs and compare them with the potential savings from refinancing.
- Your Long-Term Plans
Finally, consider your long-term plans. If you plan on moving in the near future, refinancing may not be worth it as you may not recoup the costs associated with refinancing. However, if you plan on staying in your home for the foreseeable future, refinancing can be a great way to save money over time.
In conclusion, refinancing can be a great way to save money on your mortgage payments, but it’s essential to consider all the factors before making a decision. Work with a mortgage broker to determine if refinancing is the right option for you and to explore the various options available to you.
If you are looking to make a refinance decision in the next little while, please don’t hesitate to reach out:
Satinder Grewal
604.813.5326
Satinder.Grewal@DominionLending.ca