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You Ask, We Answer: How Do I Know If It’s a Good Idea to Refinance My Mortgage?

Are you interested in paying less per month on your mortgage? Or perhaps you would prefer if your mortgage was paid off a couple of months – or years – faster? If you are a homeowner with a mortgage, one option that is open to you is refinancing. In today’s post, we will explore the topic of mortgage refinancing and how to know if it is a good idea.

How Does Refinancing Work?

In short, refinancing is a process in which pay off your existing mortgage and borrow a new mortgage under a different set of terms. In most cases, homeowners will use the funds from the new mortgage to pay off the old one. Depending on the terms of your new mortgage, there may or may not be cash left over which you can use to invest, pay down debts, make renovations or for other purposes.

Refinancing To A Lower Interest Rate

Mortgage interest rates tend to fluctuate over time and because of this, refinancing to a mortgage with a lower rate is quite popular. If you initially borrowed your mortgage when interest rates were at 5%, you may be able to lock-in a new mortgage at a lower rate. Note that it can be tough to try to “time” the mortgage market, so check in with your mortgage professional to find out if the time is right.

Refinancing For Lower Monthly Payments

Another great use of refinancing is to reduce the monthly payment required on the mortgage. If you have ten years remaining on a 20-year mortgage, refinancing to extend the payments out to 15 years will lower the monthly payment.

Refinancing To Eliminate Other Debts

Finally, many homeowners will refinance their mortgage to use some of the home’s equity to pay off other debts. For example, a family might have $25,000 in debts that are being charged a higher interest rate than their mortgage. If they have built up enough equity, they can refinance and draw out $25,000 from the home’s value. This shifts the debt from the higher interest areas into the mortgage, where it can be paid off over time.

As you can see, there are many reasons why you might want to refinance your mortgage. To learn more about the refinancing process, or to discuss your options, contact us today. Our professional team of mortgage advisors is ready to help you choose the path that best suits your financial needs.

The Pros and Cons of a Large Down Payment When Buying a Home

If you are in the market for a new home, one of the considerations you will need to make is how much to invest in your down payment. Let’s take a quick look at some of the pros and cons of making a large down payment when buying your next home.

A Large Down Payment Has Its Benefits

If you have the funds available, you may find a bit of an advantage in a large down payment. The following are a few potential benefits that you may realize.

You Can Afford More ‘House’ – if you are aiming for a large, luxurious home a significant down payment can help you get there. As long as your credit is in line with your needs, a large down payment leaves more room in your mortgage.

You May Pay Less Interest – conversely, if you don’t need to carry a big mortgage you can choose a shorter amortization period for your mortgage. A shorter loan period means that you are likely to pay less in interest.

You Might Not Need PMI – if you can afford to invest more than 20 percent of the home’s value in your down payment, you may not be required to purchase private mortgage insurance.

A Few Of The Downsides

Of course, there are some potential downsides to using a large portion of your available cash as a down payment:

Do You Have The Money? – a large down payment doesn’t make a lot of sense if your finances can’t tolerate that hit right now. If you have your down payment and little else, you might want to reconsider.

You Will Be Less Liquid In The Short Term – keep in mind that once you sign the closing paperwork, your down payment cash is gone. This will leave you a bit less liquid in the short term since you would need to sell your home to get that cash back out.

You Can’t Invest That Money Elsewhere – you won’t be able to use these funds for other investment purposes. Of course, real estate is an investment itself so this may be less of a concern.

Still Have Questions? Get In Touch

Choosing the right amount for a down payment is a decision best made with professional help. Contact your trusted mortgage professionals and we will be happy to share our experience and insight.

Make 2018 the Year You Escape the ‘Rental Trap’ by Buying Your Own Home

Are you growing tired of paying rent each month and not building your net worth? Being stuck in the ‘rental trap’ isn’t much fun, but if you are determined, you can break out. Let’s explore some of the steps that you can take to make 2018 the year that you become a homeowner.

Rent Money Is Lost Money

First – why homeownership? As you may already understand, money spent on rent is ‘lost’ money. Each month you pay your rent, but you do not build any equity, own any property or get any other benefits in return. When you own a house, the money you spend each month is being invested in the home. You are building value in the home over time which you can then realize if and when you decide to sell.

Choose Your Home And Location Wisely

Do you know where in the local area you want to live? And what kind of home you want to live in? If you are a single young professional, a condo or apartment might be the perfect starter home. However, if you are married and have a family, there will be other factors such as schools and amenities to take into consideration. Invest some time in going through local real estate listings and making a short list of communities that seem like a good fit.

Polish Up That Credit Score

Ask yourself: how is your credit score looking? Is it perfectly spotless? Or do you have some past issues that need cleaning up? It is worth checking in with one of the major credit reporting agencies to find out your credit score and if there are any blemishes that need to be taken care of. You can request a free credit report once per year, so take advantage today.

Get Your Down Payment Saved Up

Finally, if buying a home in 2018 is going to be realistic, you will need to ensure that you have your down payment saved up. Although it is possible to buy a house or condo with no down payment, there are pros and cons to this approach. If you can save 10 or 20 percent of the cost of the home, it will go a long way in helping to get your mortgage approved and the sale closed.

If you are ready to break out of the rental trap and start down the path to homeownership in 2018, contact us today. Our professional mortgage team is happy to share how we can assist you in becoming a homeowner.

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Single and Considering a New Home? Here’s What You’ll Need to Know About Your Mortgage

Have you decided that it is time to move on from renting? If you are single and living alone, you may be wondering whether or not homeownership is right for you. Let’s have a look at a few key factors that you will need to be aware of when taking out a mortgage as a single person.

It’s A Commitment – But Not For A Lifetime

Some single people shy away from the idea of buying a home as it is a significant financial commitment. When you are single, especially if you are young and early in your career, flexibility can be valuable. You might decide to move to a new city to take a new job, or you may find a partner and decide to start a family.

Keep in mind that homeownership – and your mortgage – aren’t permanent. If you decide to buy a house, condo or apartment, you can always sell it later if you need to move or upgrade to a larger home.

You’ll Need To Be Disciplined

As you will only have one income stream coming in to support you in managing your monthly finances, you will need to be disciplined. Living paycheck to paycheck is not really an option as you will end up in trouble if an emergency occurs. Some financial experts advise having at least 6 to 12 months of monthly expenses saved up, in case of a job loss or an unexpected health issue that takes you out of work.

Don’t forget that there are also mortgage insurance products that can help to cover some of your costs in the event of an emergency. These may be an option to consider as a backup plan.

Starting Small Versus Going Big

Do you need a lot of space? If not, investing in a small ‘starter’ home is an excellent option. You can buy just enough home to suit your needs without buying anything extravagant. A helpful advantage that you gain purchasing a less-expensive home is that it comes with a smaller mortgage that can be paid off faster.

Questions? Get Professional Advice

If you have questions about borrowing and maintaining a mortgage as a single person, you’re not alone. Give our professional mortgage team a call. We will be happy to share our guidance and expertise in helping you choose the mortgage product that suits your financial goals.

Taking Out a Mortgage for the First Time? Learn Why a Condo Might Be a Great First Home

Are you starting to tire of paying your monthly rent to someone and never building any equity? Renting forever can be a significant pain, especially as you’re contributing to someone else’s financial well-being. The good news is that there are affordable real estate options out there for those investing in their first home. Below we will share a few excellent reasons why an apartment or condo might be the best choice for a first-time home buyer.

A Manageable Monthly Payment

In most markets across the country, condos and apartments are available at a significantly lower cost than a full-sized house. Buying a less-expensive home means that your monthly mortgage payments will, in turn, be lower. If you are single or a young professional trying to start a family, that extra money can be a massive boost to your monthly budget.

Note that while your monthly mortgage payment may be lower, you are still responsible for other maintenance and upkeep fees. The most common is known as a homeowners’ association fee, to which all condo owners in the same development contribute. These funds are used to upkeep the building or property as well as things like landscaping, a pool or gym, and other amenities.

A Smaller Down Payment

In the same vein, buying a less-expensive home also means that you can put a smaller down payment on it when you close the sale. In many cases you are required to place a certain percentage – typically 20 percent – down to avoid having to purchase private mortgage insurance. Having to commit less in your down payment leaves more money in the bank for other purposes.

An Excellent Future Investment Property

Don’t forget that when you are ready to upgrade and move into a larger house, you can keep a condo as a rental or investment property. Once your mortgage is paid off, you are only responsible for the monthly maintenance fees and taxes. So if you can rent the condo out to a tenant, you will have an excellent source of cash flow that can help to pay for your new home or fund other activities.

The above are just a few of the many reasons why a condo can be a great starter home for first-time buyers. To learn more about your mortgage options, contact us today. Our team is happy to help.

Pay Your Mortgage Off Faster With These Money-Smart Strategies

As with any loan or line of credit, there are benefits to getting your mortgage paid down. You’ll pay less in interest, potentially saving thousands over the repayment period. Moreover, you’ll own your home outright that much quicker. Let’s explore four money-smart strategies that will help you to pay your mortgage off faster. . . . → Read More: Pay Your Mortgage Off Faster With These Money-Smart Strategies

Speed up Your Mortgage Closing Process With This Handy Four-step Guide

Are you in the market for a new house or apartment? If you are financing the purchase by taking out a mortgage, you’ll want to know how to make this transaction run as smooth as possible. In today’s article, we’ll share a quick four-step guide to speeding up the mortgage closing process. . . . → Read More: Speed up Your Mortgage Closing Process With This Handy Four-step Guide

Understanding the Differences Between ‘Prequalified’ And ‘Preapproved’ For a Mortgage

Are you in the market for a new home? If you are going to rely on mortgage financing to cover some of the purchase cost, you will need to start the application process as soon as possible. However, what if you just need to know how much you will be able to borrow so you can start finding homes in your price range? . . . → Read More: Understanding the Differences Between ‘Prequalified’ And ‘Preapproved’ For a Mortgage

Is It Possible to Get a Mortgage With Less-than-Perfect Credit? Yes – and Here’s How

Are you thinking about buying a new house? Whether you’re a first-time or experienced buyer, if your credit score isn’t looking too hot it can affect how much mortgage financing you receive – or whether you’re approved at all! But don’t fret. It’s still possible to get a mortgage approved, even with credit issues. Below we’ll share a few ways that you can get a mortgage loan even if your credit is less than perfect. . . . → Read More: Is It Possible to Get a Mortgage With Less-than-Perfect Credit? Yes – and Here’s How

The Quick and Easy Guide to Determining How Big of a Mortgage Your Family Can Afford

Are you shopping around for a new house or apartment? One of the key considerations you will need to make is figuring out how much you want to invest in your new home. Below you’ll find our quick and easy guide to determining just how much “house” you can afford. Let’s get started! . . . → Read More: The Quick and Easy Guide to Determining How Big of a Mortgage Your Family Can Afford