The most obvious–and main–reason to refinance your mortgage is to get a lower mortgage rate. When mortgage rates are near record lows, it might be a smart move to refinance. You might also want to shorten the loan’s term, moving from a 30-year mortgage to a 15-year one with very little change in monthly payments because interest rates have fallen.
When people worry about inflation (prices going up) and they crave stability, they may switch from an adjustable-rate mortgage to a fixed-rate loan for peace-of-mind, knowing their rate won’t change.
Some people refinance because they need cash to pay off their credit card, pay down their debt, or put money down on an investment property. Others go through a divorce and refinance to remove the absent former spouse from the note.
One thing to consider is this: refinancing typically costs between 3 and 6% of the loan’s principal. Therefore, if you plan to stay in the home a long time, go for it, but if you plan to move soon, it might not be worth the hassle.
Did you know Edmonton realtor Alexis Hlady can connect you with a mortgage professional to find the lowest rate? She can also help new home buyers go through the process of smartly getting pre-approved for a mortgage, therefore speeding up the home buying process.
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