Is it time to consider a refinance?

Is it time to consider a refinance? Many home owners choose to refinance their mortgage at some point. As the market changes, and your individual needs evolve, it makes sense if your old mortgage product doesn’t quite work for you anymore. Since refinances are common, they are fairly simple to complete for those who are strong candidates. However, how do you know when it’s time to think about a refinance? Here’s what you need to know!

Changing your amortization schedule

Right now, the biggest reason home owners may choose to refinance their mortgage is so they can change their amortization period. Your amortization schedule is your timeline for making your mortgage payments, including how much you pay with each installment, and how often.

You might be in a good position to either shorten or lengthen your amortization period. Shortening means you will make higher payments in order to pay off your mortgage faster. This will also help you save money in interest. When you lengthen your amortization, on the other hand, this stretches out your mortgage term. You will be making payments for a longer time, but your individual payments will be smaller. 

These days, many home owners might be thinking about lengthening their amortization period. With inflation and costs of living still quite high, and interest rates unstable, making mortgage payments can be tricky. Stretching out your amortization provides you with some financial breathing room in the short term, since your payments will be lower. However, keep in mind that long-term, the interest you accrue on a long amortization period will add up! While this can be a good temporary solution, it’s important to think ahead.

Other potential changes

During times of decreasing interest rates, many people try to refinance to secure a lower rate. However, for the time being, this is not an option for most home owners as we have been experiencing rising rates for over a year. Instead, a refinance can allow home owners to unlock things like prepayment privileges. This allows you to make larger, or more frequent, mortgage payments to help you pay it off quicker. Another possibility is switching between variable and fixed-rate products, if you think one would suit you better than the other. 

What about debt consolidation?

Some home owners may benefit from debt consolidation right now as well. This lumps all of your debts together into one payment, with one interest rate. While mortgage rates are not going to be lower, there is still the opportunity to secure a better rate for other debts such as credit cards or different loans. Plus, having one debt payment instead of several payments makes it much easier to keep track of what you owe, and pay it on time. Of course, this is a longer term solution, so be sure to chat with a broker before you make any decisions here!

Always make sure it’s worth it!

Remember, refinancing your mortgage means breaking your current mortgage term. This may come with a cost, so you must ensure the benefits of refinancing are worth this expense. The process of refinancing involves financial and time commitments. You don’t want to refinance your mortgage only to realize it wasn’t worth the extra money and effort! That’s why it’s important to always speak with a broker if you are considering refinancing. We can assess your situation and help you determine if it is the right move for you, right now.

When you consider a refinance, there are many factors to take into account. Understandably, this can become confusing and overwhelming. The good news is that as brokers, we are here to help you find the best solution for you. Whether that means refinancing or not, you have the benefit of our professional guidance before making any decisions. 

If you have any questions about your mortgage, give us a call at Centum Home Lenders! You can reach us at 506-854-6847, or get in touch with us here.