When is the Right Time to Refinance my Mortgage?

by | Feb 16, 2021 | Personal Finances | 0 comments

Refinancing your mortgage can drastically improve your current financial situation. Especially if you have significant personal debt. Here are a few points to consider before you decide when the right time is to refinance your mortgage:

• What is my current interest rate?
• What are the potential savings of refinancing my mortgage?
• What will it cost me to refinance my mortgage?

What is my current interest rate?

Generally, it is a good idea to consider refinancing if your interest rate is 1% or greater than the current most competitive refinance rate. The potential savings of interest not paid to the lender may outweigh the cost associated with refinancing.

Should I refinance my mortgage now or later on?

If you are changing lenders, here are the potential costs associated with a mortgage refinance:

• Mortgage penalty
• Mortgage discharge fee
• Appraisal fee
• Legal and disbursements fees
• Title searches and insurance

If you decide to refinance before the end of your current contract, you will have to pay a penalty to your lender. The penalty amount varies from lender-to-lender based on how they calculate the penalty. Call your mortgage servicing department and see how much the penalty would be if you decide to break your current mortgage contract. Once this amount is known, costing can be done to see if there is a financial benefit.

If you are staying with your current lender, they may offer you a penalty rebate for coming back to them for your replacement mortgage. If you are leaving your current lender, you will have to add their discharge fee to the penalty amount.

For all refinances, borrowers will have to pay legal and disbursement fees. This will take care of registering the new mortgage charge against your property, conducting title searches, and paying out the required debts from the new mortgage money.

The lender may require an appraisal to be completed on the property to determine the current fair-market value of the home.

Check out our great mortgage calculators to help you with potential savings from refinancing your current mortgage.  If you’d like help or more information please email us at [email protected] or book a no-obligation consultation.

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