5 Things To Consider Before Refinancing Your Mortgage

Posted by Diane Bertolin on March 12th, 2021

When we talk about refinancing a mortgage, the financial situation of yours, as a mortgage borrower, is a very crucial feature. The mortgage rates keep on fluctuating; hence, it won’t be wise to decide on refinancing your mortgage and seeing the temporary lower rates.

Your financial situation should be the primary thing on your minds when planning for a refinanced mortgage. If you are all set to refinance your mortgage in Windsor, the following are the five basic things you need to consider before going forward with the process.

1) Recognize The Equity Of Your House

The most basic condition you to consider before stepping into the process of refinancing your mortgage in Windsor is the equity of the particular property. The global effect of the covid-19 pandemic has caused a huge drop in the prices of homes throughout the country. Hence, recognizing the actual equity value of your house is crucial before the refinancing.

2) Keep A Good Credit Score

For the past couple of years, the lenders have not been approving mortgages that will lower interest rates. If you wish to refinance your mortgage at comparatively lower rates, you need to have a good credit score. If you have a poor credit score, you can improve it by clearing the pending debts and payments.

3) The Rate v/s Term Aspect

It is important for you as a borrower to understand the Rate v/s term aspect of refinancing a mortgage. Some people chose a shorter-term mortgage with slightly higher interest rates, while some choose a longer repayment term with very fewer interest rates. You need to decide on the type of mortgage based on your requirement.

4) The Points Of Refinancing

When it comes to refinancing a mortgage, the points are very crucial. Points-are equivalent to 1% of the credit amount. Borrowers prefer paying points to reduce the rates of interest. These points are either paid at the time of closing the credit or are included in the principle tariff of the new loan.

5) Taxes Should Not Be Ignored

We are talking about the financial aspect, and with finance come the taxes. Many people choose to refinance their mortgages in order to pay a lesser income tax. There is the possibility that you might have to pay slightly higher interest rates for the first couple of years after refinancing the mortgage.

The above points are to help you with the research before refinancing your mortgage. With all these considerations in mind, it is time for you to jump into the process of refinancing your mortgage with the help of a mortgage broker in Windsor. The broker will help you throughout the process right from contacting a reputable lender till the end of the process.

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Adam Steven is the author of this article. To know more About Mortgage Burlington please visit our website: dianebertolin.com