The Don'ts of Refinancing: What You Must Avoid
When refinancing is an option to help you with certain things one must choose to refinance only when they stand to gain from it.
Timing is everything You need to weigh in many factors such as the interest rate. If the rate of your current mortgage is lower than that of the refinanced mortgage, you will be in losses in the future and it is not a good idea. A good time to refinance is when you have 20% or less of the equity in your property. You must also have a good credit score while refinancing. To have a good score you need to pay off a lot of your current debt, update your bills, so that your score goes up. This should be done a few months in advance as the credit score doesn't go up instantly. See what the market is offering When you are looking to refinance your mortgage, you must talk to a lot of lenders and not just your current lender. You must shop around and see what the others are offering. Look beyond banks as well. If you hire the services of a mortgage broker, you can find a lot of lenders who may be able to offer more. For example some of them may be able to refinance your mortgage even when you have a slightly lower credit score than an ideal one. They may also be able to help in case you have less than ideal income needed for a mortgage refinance to go through. Verify details about the lender While you are looking to refinance your mortgage you may come across a lender whose terms you may find out of the ordinary and fantastic given your current disposition. If you find those terms too good to be true, chances are you are right. There may be lenders who are out there to cheat homeowners who are in need and thus it is your duty to protect yourself from such people. A low rate doesn't necessarily mean all good. If in doubt, look them up online, ask people who have dealt with them and do your groundwork before signing on the dotted line with them. No-cost financing While you are talking to lenders and looking for a mortgage refinancing deal that suits you the best, some lenders may be offering a 'no-cost' financing which simply means you won't have to pay the closing costs upfront as per norms. It however doesn't mean that refinancing your mortgage with them is free. It simply means you will have to eventually pay the closing costs. However, beware that such a lender may have a slightly higher rate of interest if you choose this option. It is advisable to pay the closing costs upfront. And finally you must read the document for refinancing the mortgage and comprehend the terms therein. You shouldn't sign on the dotted line without completely knowing what you are getting into. If you are looking for any help with refinancing the mortgage do reach out to us at LendX Financial in Brampton, Greater Toronto Area.