28 Aug Top Things Not To Do When Refinancing Your Mortgage

When a mortgage holder decides to refinance, they replace their existing mortgage with a new one. This is an option that thousands of borrowers choose each year to obtain a cheaper interest rate on the amount that is being mortgaged, shorten the loan’s term, change an adjustable-rate mortgage to a fixed-rate mortgage (or vice versa), consolidate debt, or access equity. Even though each borrower has different expectations, refinancing is considered a wise financial move if done correctly, may save you hundreds of dollars.

In this blog, we’ll discuss some things to avoid when refinancing a mortgage in Abbotsford.

• Not comparing mortgage products

Many borrowers don’t realize that comparing mortgages might save them a significant amount of money; they just go to their current lender to renew or refinance. The best approach to ensure you obtain the best terms and conditions at the lowest possible cost is to shop around. In certain cases, telling lenders you’re still shopping around for the best mortgage lender will convince them to offer you a better price.

• Concentrating only on the interest rate

Even though a low interest rate can save a lot of money, there may be upfront expenses associated with refinancing in some situations. While some lenders provide “no-cost” mortgages with no closing expenses up front, these fees are typically rolled into the loan over time. A reliable mortgage broker in Abbotsford can help you get the best mortgage refinancing based on your needs and financial situation.

• Overextending the mortgage term

Your monthly payments may be reduced by extending the duration of your mortgage, but you will incur significant additional interest over time. Refinancing into a new mortgage term for the remaining of your current mortgage is a wise decision. For instance, after paying off your 30-year mortgage for the previous eight years, you might decide to apply for a new, five-year loan. In certain situations, shorter-term mortgages can also offer cheaper interest rates, allowing you to extend the term of your mortgage while saving money each month on interest.

• Not refinancing for the right amount

Refinancing can be expensive, so make sure you are refinancing for the correct amount. When refinancing for a larger amount than your existing original mortgage amount, make sure you request adequate equity take out to avoid having to seek mid-term financing a year or two into a 5-year term. Also, make sure that you can afford the increased monthly mortgage payments to avoid any inconvenience later on.

• Not comparing rates and terms

When it comes to refinancing a mortgage, borrowers prioritize the interest rate. When making your decision, don’t overlook the other loan terms, especially the loan’s duration. A low interest rate and a long repayment term will reduce your monthly payments, but the overall cost of refinancing will be lower if the loan has the shortest duration.

So, these were the top things you should not do when applying mortgage refinancing in Abbotsford. Satbir Bhullar is your trusted mortgage refinance broker who is always ready to assist you with the right refinancing procedure. Contact us today for more details.