Sometimes, clients get renewing and refinancing their mortgages mixed up. What is the difference between renewing a mortgage and refinancing a mortgage? Well, when your mortgage is up for renewal, you aren’t looking for new monies per se you are just renewing your term that is up on your mortgage. For more information on renewals, click here.
These are just a few reasons people refinance their homes.
There are some rule changes when it comes to refinance, so let’s review them now.
You can access 80% of the value of your home for a refinance, unless you get a second mortgage. A second mortgage usually comes with some sort of lender fee, meaning you will pay a lot more interest.
Judy has a home valued at $400,000. She currently owes a $200,000 mortgage on the home, and she has a credit card at 19% with a balance of $20,000. She also has a line of credit that the bank just increased the rate to 15% and the balance is $10,000. Judy wants to refinance and payout her credit card and her line of credit. She is going to refinance her home and take a mortgage of $230,000. Now, with the refinance rule she can access 80% of the value of her home, which is $320,000. This means that Judy can request the mortgage of $230,000.
There are banks that typically will offer an incentive to come to their bank. This often means they will cover your appraisal fee, as well as the transfer fees to re-register your mortgage. Sometimes it is easier to just top up your existing mortgage with your existing lender. This is where it is great to have a mortgage associate to help you sort all these options out and help you decide what is best for your situation.
Click here to apply for a refinance today.