The Pros and Cons of Mortgage Refinancing
Mortgage refinancing can be a great way to lower your monthly mortgage payments but obtaining a new home loan isn't right for everyone. Before you refinance, consider the following advantages and disadvantages of applying for a new mortgage to replace your current one.
Advantages of Mortgage Refinancing Your Edmonton Home:
- It will allow you to obtain a lower interest rate than you're paying on your current mortgage, which can save you hundreds, or even thousands of dollars over the life of your home loan.
- If you opt for cash-out mortgage refinancing, you'll be able to convert up to 80 percent of the equity built up in your home into cash, which you can use to pay off debts, finance home improvements, or even start a business.
- If you currently have a fixed-rate home loan, mortgage refinancing allows you to take advantage of an variable-rate home loan, providing you with an interest rate that adjusts automatically to reflect changing interest rates. Even small fluctuations in interest rates can make a significant difference in the total amount you pay for your mortgage, potentially saving you a lot of money over the long term.
Disadvantages of Mortgage Refinancing Your Edmonton Home:
- Refinancing typically involves appraisal, legal, and closing fees, which can account for anywhere between 3 and 6 percent of your new mortgage. Unless you've opted for a no-cost loan, closing and other fees will be rolled into your new mortgage. Before applying for refinancing, it's a good idea to review your financial situation and factor these extra costs into your overall budget.
- Refinancing lengthens your mortgage term, which may be disadvantageous if you've already been paying your current home loan for more than 10 years. Additionally, any payments you make will be only be applied to the interest of your new mortgage for the first few years of your term.
Still not sure if mortgage refinancing your Edmonton home is right for you? We can help. Contact us today to discuss your long-term goals and determine whether mortgage refinancing is right for you.Request Mortgage Info