Mortgage refinancing involves taking out a new home loan to pay off your existing one. There are many reasons why a homeowner might consider refinancing, but the most common reason is to consolidate other debt or lower your interest rate. Not only does consolidating high interest debt save homeowners hundreds of dollars every year, but it also helps make monthly bills more manageable. But when is the right time to refinance? Here’s how to determine whether mortgage refinancing would be beneficial to you.

Consider Interest Rates on Unsecured Debt

A great exercise to do, is to add up all of the interest you are paying monthly on your high interest credit cards and loans. Do you have the ability to consolidate those loans into your mortgage? Circumstances vary, however, if you are paying over 10% on loans outside of your mortgage, there is likely enough savings to consider mortgage refinancing. Before applying for mortgage refinancing, be sure to contact a mortgage broker to see if this option will be beneficial to you.

Calculate Extra Costs

Refinancing can incur some administrative costs, including closing costs, mortgage penalties, and appraisal fees. Before seeking mortgage refinancing, it’s important that you take these extra costs into consideration. If you are consolidating debt, the savings are likely enough to recoup the closing costs on the new loan. If, however, you are only refinancing for a lower interest rate, it is important to take these costs into consideration and make sure the savings are still there and it still makes financial sense.

Refinancing your home loan can be a great way to reduce your interest rate, but it’s important to consider your financial goals and determine whether refinancing would be advantageous in your situation. Contact Jamie Arthurs to discuss whether mortgage refinancing is the right solution for you.

When your mortgage matures, it indicates the end of the current term of your loan. When your term is shorter than your amortization period, you have to go through the renewal process several times until you pay off the entire loan.

Before your term expires, your lender will send you a renewal offer. The offer includes a new term, and a new rate.

The renewal process is also an opportunity to find a new lender with more favourable rates and terms. When your mortgage is up for renewal, it can mean re-qualifying for your mortgage.

Let’s go through different scenarios to explain what you can do if your mortgage renewal is denied.

Why Your Current Lender May Deny Your Mortgage Renewal

One of the advantages of sticking to your current lender is that they typically don’t have to re-qualify you. However, your lender always has the ability to request details about your current financial situation before approving your renewal. The lender may verify that your debt to income ratios are still reasonable and that you still have the ability to make your payments. Though this practice is uncommon if your mortgage has been paid as agreed.

Why A New Lender May Deny Your Mortgage Renewal

If your current lender denies your renewal, you can look around for a new lender. You need to submit a new mortgage application and re-qualify for the mortgage.

Just as when you got your original mortgage, the lender will confirm income, credit, and mortgage repayment history. If any of these items do not fit their guidelines you may be denied by that lender.

What to Do When You Are Denied

If you are struggling to find a lender to renew your mortgage, you can look at alternative options with the help of a mortgage broker.

First, if your original lender was an “A” lender, then you can approach a “B” lender about your situation. “A” lenders are usually banks or credit unions, while “B” lenders are trust companies and equity lenders. “B” lenders are more likely to accept your mortgage renewal since they work with individuals with low credit scores and people with more debt than an “A” lender would handle. For this to be an option you will need at least 20% equity built up in your home. It is important to work with your mortgage broker to find the most suitable renewal.

Mortgage Renewal

To secure a great mortgage renewal, ensure you make timely monthly payments, and maintain a good credit score. If you are planning to renew your mortgage, contact Jamie Arthurs for expert assistance.