Sarah A. Colucci, York Region's Mortgage Expert. Savings Guaranteed.
  • Home
  • WHY USE SARAH FOR YOUR NEXT MORTGAGE
  • APPLY ONLINE
  • PRODUCTS
    • Free House Value Tracker Report
    • CASH-BACK MORTGAGE
    • BRIDGE FUNDS
    • REVERSE MORTGAGES
    • SELF-EMPLOYED MORTGAGES
    • FIRST-TIME HOME BUYER PRE-APPROVALS >
      • FIRST-TIME HOME BUYER TAX CREDIT
    • MORTGAGE REFINANCE >
      • Prepayment penalties
    • SPOUSAL BUYOUTS
    • INVESTMENT PROPERTIES AND RENTALS
    • BRUISED CREDIT
    • PRE-APPROVALS
    • NEWCOMERS
    • DEBT CONSOLIDATION
    • HOME EQUITY LINE OF CREDIT
    • PURCHASE PLUS IMPROVEMENT PROGRAM
    • WHY INVEST IN REAL ESTATE
    • MORTGAGE RENEWALS >
      • New Mortgage Rules and Mortgage Renewals
    • SECOND MORTGAGE LOANS
    • LESS THAN 20% PROPERTIES
    • DOWN PAYMENT
  • CONTACT ME
  • PRIME RATE CANADA
  • CLOSING COSTS
  • DOCUMENTS REQUIRED FOR MORTGAGE FINANCING
  • MORTGAGE DICTIONARY
  • MORTGAGE NEWS
  • GOVERNMENT MORTGAGE RULES
  • MORTGAGE TIPS
  • HOUSE HUNTING CHECKLIST
  • APPRAISALS
  • FIXED OR VARIABLE RATE?

Sarah Colucci's Mortgage Blog

Stay enlightened about mortgage & real estate news in Canada.
Mortgage News 2022

Would You Increase Your Monthly Mortgage Payment By $50 To Save Over $800 a month? That's How Refinancing Works.

3/9/2020

0 Comments

 
Picture
Refinancing your mortgage can help you save tons of money - and not just immediately but also over the rest of your mortgage term, too. I'm not just saying this, either - it's VERY TRUE.


One of the reasons homeowners do not refinance is they believe it may be too costly, the process too lengthy, or they may have to pay a higher interest rate, which defeats the purpose of renegotiating their mortgage. There are also other reasons homeowners do not refinance, which also make up a part of the myths about refinancing floating around today.


Unfortunately, misinformation can often get in the way of homeowners saving money and getting their financial profile in a better position. The truth is by renegotiating a mortgage contract through refinancing; a person CAN free up a significant amount of cash flow and also pay LESS interest on their outstanding debts. Refinancing, therefore, can be (and often IS) a big win for anyone looking to save money. The process is also not lengthy and can get completed as soon as one to two weeks from the date of application. 


Costs


Some borrowers have a hard time crunching the numbers and determining how much they can save from refinancing. In this case, it is essential to consider two realities. First, a borrower usually refinances into a lower rate mortgage and consolidates high-interest debt like credit cards or unsecured personal loans. This means that over the next term of their mortgage, they save tens of thousands of dollars in interest payments because they traded higher interest for low interest and eliminated disastrous interest-only payments on other credit. 


Paying less interest to the banks also means more principal gets paid against their mortgage loan, which means MORE SAVINGS and hopefully, more money in the bank over time. Most people cringe when they learn how much money they've been blowing on a monthly and yearly basis on credit card balances that don't go away. They are shocked when they learn how credit card companies calculate interest and how the odds are against them when it comes to paying off their balances. 


What happens if mortgage rates go higher?


If the proposed mortgage interest rate is higher than the actual rate, then it is essential to look at WHY one is refinancing in the first place. If someone is drowning in monthly debt payments, which consist of interest only, meaning they will NEVER pay their balances off in full, then a mortgage with a higher rate remains a great option.


In the case of interest rates, it is critical to realize that no one has been able to time the market and interest rates with 100 percent accuracy. Waiting for interest rates to decline may be a losing battle because, during the wait, the interest rates may climb even higher. Running the numbers and determining total savings is the gold standard at proving whether refinancing is a viable and worthwhile option or not. Only after running the necessary calculations and examining the savings can a person make sound decisions. 


Are banks the only place you can refinance your mortgage?


Major banks are just one type of lender - there are more. Mortgage finance companies accessed through the broker channel and credit unions, for example, can offer much better deals at any given time. Most people are programmed to believe that banks are the best place to get mortgage financing. Depending on the type of borrower, credit, and income, a borrower may be better suited for a different kind of lender, which is why it is worth exploring different options. 


A mortgage broker can help you shop around, which increases your chances of finding the absolute best deal on your mortgage. 


Refinancing - not the only answer?


Sometimes after running the numbers refinancing is not the best option. The prepayment penalty may be too costly, and the person should stay where they are. At this point, we must ask: Are there other options?


The good news is YES. A borrower in this situation - one where they shouldn't touch their first mortgage, can explore a second mortgage, line of credit or private loan.


Private loans, contrary to popular belief, do not cause financial hardship. They can be a great way to put a "bandaid" on a situation temporarily while some other situation sorts itself out. There are many different reasons a person may require a private loan, and if refinancing is out the question, a borrower should speak to their mortgage broker about getting this type of loan and pricing, and so on. 


Do you have mortgage questions? Please feel free to call or write.


Sarah A. Colucci
Mortgage Agent
Mortgage Edge, Broker 10680
Direct: (647). 773-4849
Email: sarah.colucci@coluccimortgage.com 

RSS Feed

0 Comments



Leave a Reply.

    Picture

    By: Sarah Colucci

    Senior Mortgage Agent, Lic. M14000929

    Archives

    January 2023
    October 2022
    September 2022
    July 2022
    June 2022
    May 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    August 2021
    July 2021
    June 2021
    May 2021
    February 2021
    December 2020
    November 2020
    October 2020
    September 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    February 2019
    January 2019
    December 2018
    August 2018
    May 2018
    April 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017

    Categories

    All

    RSS Feed

GET IN TOUCH WITH US

Let's get started today.



Address

411 Queen St. 
Newmarket, ON
​L3Y 2G9

Sarah A. Colucci, Mortgage Agent Lic. M14000929
Sherwood Mortgage Group
Licence # 12176

Telephone

Direct: 647-773-4849
​
Email: scolucci@sherwoodmortgagegroup.com
Picture
  • Home
  • WHY USE SARAH FOR YOUR NEXT MORTGAGE
  • APPLY ONLINE
  • PRODUCTS
    • Free House Value Tracker Report
    • CASH-BACK MORTGAGE
    • BRIDGE FUNDS
    • REVERSE MORTGAGES
    • SELF-EMPLOYED MORTGAGES
    • FIRST-TIME HOME BUYER PRE-APPROVALS >
      • FIRST-TIME HOME BUYER TAX CREDIT
    • MORTGAGE REFINANCE >
      • Prepayment penalties
    • SPOUSAL BUYOUTS
    • INVESTMENT PROPERTIES AND RENTALS
    • BRUISED CREDIT
    • PRE-APPROVALS
    • NEWCOMERS
    • DEBT CONSOLIDATION
    • HOME EQUITY LINE OF CREDIT
    • PURCHASE PLUS IMPROVEMENT PROGRAM
    • WHY INVEST IN REAL ESTATE
    • MORTGAGE RENEWALS >
      • New Mortgage Rules and Mortgage Renewals
    • SECOND MORTGAGE LOANS
    • LESS THAN 20% PROPERTIES
    • DOWN PAYMENT
  • CONTACT ME
  • PRIME RATE CANADA
  • CLOSING COSTS
  • DOCUMENTS REQUIRED FOR MORTGAGE FINANCING
  • MORTGAGE DICTIONARY
  • MORTGAGE NEWS
  • GOVERNMENT MORTGAGE RULES
  • MORTGAGE TIPS
  • HOUSE HUNTING CHECKLIST
  • APPRAISALS
  • FIXED OR VARIABLE RATE?