Pros and Cons of a Mortgage Refinance!!!

General Divyang Patel 12 Jun

Thinking About Refinancing Your Mortgage? Here’s What You Need to Know 💡🏡

So, you’re considering refinancing your mortgage? Great choice! Refinancing can potentially save you money, but it’s essential to weigh the pros and cons. Let’s dive into the details.

Pros of Refinancing:

1. Lower Interest Rates: Refinancing at a lower rate can save thousands over the life of your loan, reducing monthly payments and increasing your savings.

2. Shorten Your Mortgage Term: Switch from a 30-year to a 15-year mortgage to save on interest and become mortgage-free sooner.

3. Access Home Equity: Tap into your home’s increased value to finance renovations, pay off high-interest debt, or fund education through an equity take-out refinance.

4. Extend Your Mortgage Term: Lower your monthly payment by extending the mortgage term, though this increases overall interest expense.

Cons of Refinancing:

1. Closing Costs: Appraisal, legal, lender, and broker fees can add up. Calculate how long it will take to recoup these costs through your new mortgage savings.

2. Prepayment Penalties: If your mortgage isn’t at maturity, expect a penalty from your current lender. Ensure you know this cost upfront.

3. Extended Loan Term: While lowering monthly payments, extending your loan term adds extra years of payments and more overall interest.

4. Short-Term Plans: If you plan to sell your home soon, refinancing may not save enough to offset the closing costs and fees.

Always discuss your options with a mortgage professional. They can review your needs and situation to find the best solution for you and your family.

Let’s get in touch if you have any questions.

Your trusted & friendly Mortgage Agent:

Divyang Patel – 647.740.8902

www.divyangmortgages.ca

Transform Your New Home with a Purchase Plus Improvements Mortgage:

General Divyang Patel 12 Jun

Ever heard of a purchase plus improvements mortgage? It’s a game-changer for homebuyers, allowing you to finance both the purchase of a property and the renovations it needs. Let’s dive into how this works and why it might be the perfect solution for you.

A purchase plus improvements mortgage lets you borrow additional funds for renovations or upgrades to a property you’re buying. This can be incredibly beneficial if you don’t have enough cash on hand for both the purchase and improvements.

Here’s how it works:

  • Find a property you love that needs work.
  • Provide the lender with quotes for the renovations.
  • The lender adds these costs to your mortgage.
  • At closing, funds for the purchase and renovations go to your lawyer. The renovation funds are held in trust until the work is completed and approved.

Funds may be released in stages as renovations progress, ensuring the work is done as planned. This type of mortgage spreads the renovation costs over the life of the loan, making it manageable and convenient.

Think of it like financing a car with snow tires included. You spread out the cost rather than paying upfront.

Not all lenders offer this mortgage, so do your research. There might be specific restrictions, like a minimum loan amount or a requirement for licensed professionals to complete the work.

While there are many benefits, there are also some downsides. Renovations must add value to the property to justify the additional funds borrowed. Also, interest rates might be higher due to the increased risk for the lender.

Proper planning and budgeting are crucial. Ensure the renovations are within your means and will add value to the property. With the right approach, a purchase plus improvements mortgage can turn a fixer-upper into your dream home!

Your trusted & friendly Mortgage Agent:

Divyang Patel – 647.740.8902

www.divyangmortgages.ca