Some homeowners are happy with their mortgages and feel no need to refinance. Others wonder if a change would benefit them in some way. It’s true that mortgage refinancing can save you money and make things easier if you choose the right approach. Here are some of the more common reasons why property owners decide to give refinancing a try.
Make Managing Your Mortgage Simpler With A Fixed Rate
The present mortgage came with a fixed term followed with a floating or variable rate that will apply to the remaining balance. After having a fixed rate for several years, you’re not so sure that you want to migrate to a variable rate. If that’s the case, now is the time to refinance and lock in a fixed rate that will serve you well until the property is paid for in full.
Here the goal focuses on keeping something that you like without having to deal with changes. There’s no doubt that a fixed rate will make it easier to plan out the monthly budget and not have to allow for any shifts in the amount of the mortgage payment. Along with keeping things simple, this also allows you to include a line item for savings every month and not be concerned about having to divert more funds to paying the mortgage.
Lock In A Lower Rate Before Interest Rates Increase
You have reason to believe that interest rates will be increasing in the next year or so. At the same time, your credit score is much better than it was when you obtained the first mortgage. Could it be that you could lock in a lower rate if you refinance now? The only way to know for sure is to talk with a few lenders and see what they offer.
In the best-case scenario, that improved credit score plus a few other changes may be all it takes to secure a better fixed rate now and avoid the increases later. You end up paying less interest from now on, something that’s sure to be good for your budget.
Restructure Your Debt And Save Money
You almost had your first mortgage denied at closing in Canada but luckily found an emergency mortgage that allowed you to proceed with the purchase. Now you need to think about what can be done to restructure the debt and save some money. Refinancing may be the way to go.
In this scenario, you’re likely to find a better rate. Assuming you’ve built up some equity in the home, it may be possible to be approved for enough to pay off some other bills and leave you with basically a mortgage to cover every month. Eliminating the other debt and the interest rates that applied to them will allow you to save money over the long run. Zero balances on those other accounts will be good for your credit also.
Lower Monthly Payments
You could find that the refinancing effort leaves you with lower monthly mortgage payments. Even if the duration isn’t any longer, it’s nice to free up more of your monthly income. Put some aside in an interest-bearing account while occasionally making an extra mortgage payment.
There are other reason to consider refinancing an existing mortgage. Think about how this approach would help you and possibly create some additional financial security. You may find that this solution will help you in more ways than one.
