Refinancing
1. Lower interest rate:
Refinancing your mortgage at a lower interest rate can help you save money over the life of your loan. This is particularly true if you have a long-term mortgage, such as a 30-year fixed-rate mortgage.
2. Lower monthly payments:
By refinancing to a lower interest rate or by extending the term of your mortgage, you may be able to lower your monthly payments. This can help make your mortgage more affordable, freeing up cash for other expenses.
3. Shorter loan term:
Refinancing can also allow you to shorten the term of your loan. If you are currently paying off a 30-year mortgage, for example, you may be able to refinance to a 15-year mortgage. This can help you pay off your mortgage faster and save money on interest payments.
4. Debt consolidation:
Refinancing can also help you consolidate high-interest debt, such as credit card balances or personal loans, into your mortgage. This can lower your overall interest rate and help you pay off your debt more quickly.
5. Access to equity:
If you have built up equity in your home, refinancing can allow you to access that equity in the form of cash. This can be useful for home improvements, debt consolidation, or other expenses
1. Closing Costs:
Refinancing typically involves closing costs, which can be quite expensive, especially if you’re refinancing a large mortgage.
These costs can include:
application fees
loan origination fees
appraisal fees
title search and insurance fees
other fees that vary by lender and location
2. Risk of Losing Equity:
If you’ve built up equity in your home, refinancing could lead to a decrease in equity, especially if you’re taking out a large amount of cash. This could leave you vulnerable to market changes or financial difficulties in the future.
3. Impact on Credit Score:
Refinancing your mortgage can have an impact on your credit score, as it involves a hard credit check and could lower your credit utilization ratio. This may make it more difficult to obtain credit in the future or lead to higher interest rates on other loans.
Home renovations are exciting for any home owner but they shouldn’t burden you financially.
Whether you are updating your home from the 70’s to 2020 or looking to reduce your carbon footprint. You can add value/equity to your home through renovations and it can also help finance those unexpected maintenance costs that come with home ownership.
Depending on the amount of equity in your home (the value of your home minus any debts secured against it) you may qualify for an equity line of credit. A home equity line of credit is secured against your home making the rates much lower than traditional unsecured lines of credit from your bank.
They can be used for a variety of things, such as:
Renovations
Investing
Debt consolidation
Dream vacation
Wedding
Money that is available at any time for anything you’d like
In the past, home equity was something not realized financially until you sold your home. Today, you have access to the equity at any time and can leverage it for consolidating debt, home renovations, and other large purchases.
It is important to understand how much equity you can access and the costs associated with that transaction. Use your home equity to best suit your needs. Accessing the equity in your home can have a positive financial impact. Knowing how and when to exercise this option is the key to using it smartly.
Using your mortgage prepayment options can drastically reduce the total amount you spend on your mortgage and shorten the time it takes to pay it down. Even paying a little more each month can make a huge difference.
Anytime you increase your payments, the excess that you pay per payment goes directly into the principal portion of your mortgage. This is a great way to drastically reduce the interest you will have to pay over the term of your mortgage.
Typical prepayments allow you to add between 10% to 20% of your payment amount to each payment, depending on your lender. Let’s say you just paid off a loan and now have those additional funds available each month.
Making a large payment can be a great option for paying down your mortgage. Whether it’s a Christmas Bonus, an inheritance or maybe even pulling an amount from an investment, lump sum payments help you reduce the amount of interest you will be required to pay on your mortgage.
