When you refinance your mortgage you secure a new loan and use it to pay off the existing one. There are any number of reasons why a homeowner would want to refinance but chief among them is to save money over the long term by obtaining a lower interest rate. Refinancing is often an overlooked tool in the financial arsenal but one you should be aware of, particularly if your current mortgage was locked in years ago when interest rates were higher.
Should I Refinance My House in Thornhill?
At RMAI/Loancentral.ca we’ve helped scores of Thornhill residents free up money in both the short and long term by helping them refinance their mortgages. If you’re asking yourself “Should I refinance my house in Thornhill?” you’ll want to consider the following:
- You can secure a lower interest rate – Obtaining a new loan with an interest rate just half a percentage point lower than what you are paying now will save you thousands of dollars over the course of your loan. In fact if you’re currently paying 9% interest on a $100,000 mortgage reducing the interest rate by 3% would reduce your monthly payment by more than $200. If your new loan is for 20 years that’s nearly $50,000 more in your pocket over the life of the loan.
- You can repay your loan quicker – Some homeowners want that extra cash in their pocket every month while others refinance in order to pay off their mortgage faster. If you’ve reduced the interest rate on the aforementioned $100,000 loan from 9% to 6% but you keep the monthly payment basically the same you’ll be taking much bigger bites out of the principal every month and will be able to repay the loan nearly twice as fast.
- You can lock in one of today’s historically low rates – Attempting to determine where interest rates are going can be a tricky proposition, although in recent years they’ve be pretty uniformly low when compared to historic norms. As such, at this moment in time there isn’t a big difference between adjustable and fixed rate mortgages rates. But you may want to lock in one of today’s low fixed rates anyway just as an insurance policy against future rate hikes.
While any of the above reasons are typically good enough to justify refinancing you still need to think long and hard about whether it’s the right thing for you. That’s because there are a number of potential pitfalls involved, including committing yourself to monthly payments that never seem to end. One of the home financing experts at RMAI/Loancentral.ca can sit down with you and go over the various pros and cons so that you have a clear picture of both.
The Bottom Line
At the end of the day the impulse to “refinance my house in Thornhill” may well pay handsome dividends in lower monthly payments or faster repayment. But it’s not without risks. Before you refinance be sure to call RMAI/Loancentral.ca and talk to one of our experts. You’ll be glad you did.