When Should You Refinance Your Mortgage?
Mortgage refinancing is the process of taking a new loan to pay off your original mortgage. A lower interest rate is the most common reason why borrowers often choose to refinance their mortgage.
If you’ve already made a decision to refinance your mortgage and are looking for reliable lenders, then the services of a mortgage consultant can be invaluable. Choose the best mortgage consultant in Richmond Hill with Banyan Lending Partners. We can connect you with reliable private lenders from our vast network.
Wondering if mortgage refinancing is the right option for you? Refinancing can be the best decision provided it is done for the right reasons. Let’s take a look at some situations when mortgage refinancing is a good option.
Interest Rates are Lower
With a lower interest rate, your monthly payments will be lower. A lower interest rate of at least 1% to 2% should be a good reason to refinance.
You need not wait until your renewal period. If you are worried about penalty charges, worry not. Any penalty charges applicable on the existing loan would be covered by the savings you make from the lower monthly payments.
Shorten the Duration of Mortgage
You can shorten the duration of your mortgage by increasing your monthly payments. With a shorter mortgage term, you’ll be able to save on the interest payments.
As the best mortgage consultant in Richmond Hill, Banyan Lending Partners can connect you to the right borrower to suit your payment needs.
For example, if you choose to increase your monthly payments but do not intend to pay the same amount until the end of the term, we can connect you with borrowers who offer a more flexible repayment plan.
With some of our refinancing lenders, you can pay a lower interest rate while keeping the same monthly payments. This way, you’ll not only shorten your mortgage term but alsobenefit from cost savings, thanks to the lower interest rates and the shorter term.
You can shorten your mortgage term further by opting for an “accelerated” mortgage payment – you can make monthly payments of the same amount, but do so often. This method helps you to save money on interest payments over a longer mortgage term.
Convert to a Fixed-Rate or Adjustable-Rate Mortgage
If you are repaying your existing loan on an adjustable-rate mortgage, you can refinance to a fixed-rate mortgage if the interest rate of the adjustable-rate mortgage is more than that of the fixed-rate. This way, you’ll proof yourself from risks of future interest hikes.
Refinancing to an adjustable-rate mortgage from your existing fixed-rate mortgage is beneficial if interest rates fall. Check if the dip is steady though.
Refinancing your mortgage can reduce your debt burden significantly. Having expert guidance is always helpful. For more information and expert guidance, get in touch with Banyan Lending Partners.
