2017: The Year of Refinance? Maybe

With the new rules and regulations introduced late 2016, together with the so called “Trump” factor and all else going on with bond rates and the overall economy, are rates on the rise? Perhaps, but no certainty. We have seen an increase since late last year, but for now, it seems to have tapered off.

Regardless, looking at your situation and overall short and long term needs is never a bad idea.

Should I Refinance?

For many, this does make a whole lot of sense. With home values having increased, dramatically in some areas, and continuing to rise, refinance can provide homeowners access to their equity. Why? Well most have many ideas where they can use freed up funds, especially if its economically viable to do so. It could be for debt consolidation, home improvements or just about anything else you can think of.

For those with second mortgages, credit card debt, student loan debt, refinancing usually provides an amazing remedy. With the equity in property built by paying down the mortgage, together with the increase in property value, many now have the possibility of entertaining refinancing as an exit plan from their current financial situation.

The key to this in my opinion is having at least 20 percent equity in your property post refinancing. There are financing programs that can take you beyond the 80 percent level, but they are more expensive and usually will not put you in a better position. So, if you have sufficient equity to leave at least 20 percent equity in your property post refinancing, it’s something you could be considering.

Re-Structuring

Some wish to refinance simply for the purpose of re-structuring their current mortgage situation. Perhaps they can arrange things at a lower rate, with a lower amortization to pay the mortgage off much faster. Or they wish to align their pay back of the mortgage to a certain date, such as a retirement date. You can set your pay off date to a retirement date, or date kids are off to college, university, etc.

Generally speaking, any time you shorten the term, you save on interest payments. Couple that with a lower rate and it becomes even more impactful.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

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