Refinancing Your Home
Life happens. Whether you are facing financial emergency, wanting to improve your financial situation, put more into your investment portfolio or simply wanting to spoil yourself with a long overdue trip, mortgage refinancing can be the answer – when done properly!
Refinancing your mortgage refers to the process of renegotiating your current mortgage agreement for a variety of reasons. Essentially, refinancing allows you to pay off your existing mortgage and replace it with a new one.
There are a variety of reasons to consider mortgage refinancing, including but not limited to:
● You want to leverage large increases in property value
● You want to get equity out of the home for upgrades or renovations
● You want to expand your investment portfolio
● You are looking to consolidate your debt
● You have kids headed off to college
● You are going through a divorce
● You want a better interest rate
● You want to convert your mortgage from fixed to variable (or vice-versa)
Mortgage refinancing can greatly improve quality of life via reducing financial stress and helping you get back on track for your future. More specifically;
Access a Lower Interest Rate
One reason to refinance your mortgage is to get a better rate, – and this is especially true when done through a mortgage professional. On average, a Right Team Mortgage professional has access to over 60 lenders! This allows them to find the best mortgage product for your unique needs, versus traditional banks that only have access to their own mortgage offerings. In addition, using a mortgage expert allows you to benefit from their advice at zero cost.
Consolidating Your Debt
Do you have various types of debt from credit cards and lines of credit, to school loans and mortgages? Did you know that most types of consumer debt have much higher interest rates than those you would pay on a mortgage? Refinancing can free up cash to help you pay out these debts. While it may increase your mortgage, your overall payments could be far lower and would be a single payment versus multiple sources. Keep in mind, you need at least 20% equity in your home to qualify for this.
Modifying Your Mortgage
Thinking of modifying your mortgage? Sometimes you need to pay off your mortgage faster or change your mortgage type. Maybe you came into some extra money and want to put it towards your mortgage, or maybe you are weary of the market and want to lock in at a fixed-rate for security. Feel free to contact a Right Team mortgage professional to discuss potential penalties.
Utilizing Your Home Equity
One of the biggest reasons to buy in the first place is to build up equity in your home. Consider your home equity as the difference between your property’s market value and the balance of your mortgage. If you need funds, you can refinance your mortgage to access up to 80% of your home’s appraised value!
Renewing Your Mortgage
When it comes time to renew your mortgage, most lenders will send you a renewal letter when there is around 3 months remaining on your term. While nearly 60% of borrowers simply sign and send back their renewal without shopping around for a more favourable interest rate, this is actually the best time to check out your options.
Since your term is ending, this is a great time to shop the market or redo your mortgage WITHOUT PENALTY. If you have been wanting to switch your mortgage from fixed to variable-rate (or vice-versa), or want to move to a different lender or try for a lower rate, your Right Team Mortgage professional can help!
Do be advised, if you are considering switching lenders, you will need to inquire about any existing life insurance or other policies that you have, as this could be affected if you change lenders. You should also be aware that NEW insurance could be more expensive as you are reapplying and your circumstances (age, health) will have changed since your initial mortgage term and insurance plan was signed.
A Right Team Mortgage Professional can help answer all your refinancing questions – and more – as well as shop the market to find you the best rate! With access to over 60 lenders, they are able to quickly compare mortgage rates and products and help you make the switch!
Reverse mortgages continue to gain popularity for Canadian homeowners aged 55 and older. One reason for the increased popularity of the reverse mortgage is simple necessity. Many retired Canadians are looking for options to increase their cash flow either by paying-out other debts, or by accessing cash to help with everyday life expenses. In addition, Canadians have a growing preference to remain in their homes for as long as possible. Doing so may require costly renovations and upkeep. Whatever your need, a reverse mortgage might be a great solution!
Reverse mortgages are designed for Canadians who are 55 and older. The goal is to allow these individuals to tap into the equity of their home to assist in comfortable financial living. However, the difference is that once a reverse mortgage is in place, borrowers are not required to make regular payments. This provides access to a considerable inflow of cash, with the flexibility of optional payments. The only time payment will be required is when you sell or move out of your home.
The payout of the mortgage at this time would consist of the original principal balance, plus the accrued interest and any fees incurred since inception. It is a reverse mortgage because you do not make payments and the balance increases with the accrued interest, as opposed to reducing like a traditional mortgage. Fear not, the equity historically is still maintained or even grows as the appreciation value is generally higher than the interest accrual.
While the focus of a reverse mortgage is on older individuals, this is also a great option for individuals wanting to assist their elderly parents. Instead of selling and moving to a care home or assisted living, some individuals prefer to stay where they are familiar and instead opt for in-home care. A reverse mortgage is a terrific way to access the equity in the home, month by month, to pay for other expenses.
Reverse mortgages are designed to allow you to access up to 55% of your home’s equity, thereby allowing you to convert your home equity into cash. This can be done as either a one-time lump sum payment, or you can choose to structure it to receive monthly payouts. The money received through a reverse mortgage can be used to pay off existing debts, gift money to family, expand quality of life, add safety features to the home, or expand your investment portfolio.
The benefits of a reverse mortgage do not end at the ability to cash in on your home’s equity! In fact, these benefits also include:
● No monthly mortgage payments
● No income or credit qualifications
● Very little paperwork required
● Title and ownership of property remain in homeowner’s name
● Flexible options to break term early and to pay interest off monthly, if preferred
● Penalty waived in the event of death or care home placement to preserve the estate
If you think a reverse mortgage might be the right option for you or your parents, contact a Right Team Mortgage Professional today to discuss your current situation and how this increasingly popular mortgage option can help.
With a Reverse Mortgage, You No Longer Own Your Home
FALSE. You always maintain title, ownership and control of your home. The reverse mortgage lender simply has a first mortgage on the title.
You Will Owe More Than the Value of Your Home
FALSE. Most reverse mortgages come with a “No Negative Equity Guarantee”. As long as the homeowner has met the required obligations, the amount you will have to pay on the due date will not exceed the fair market value of your home.
Reverse Mortgages are Expensive
FALSE. Much like a conventional mortgage, an appraisal of your property and independent legal advice is required for a reverse mortgage and will be similar to the costs you would incur on a regular payment mortgage. However, beyond this the only additional fees are a one-time closing and administration fee. When compared to the cost of moving to another home, the reverse mortgage is a much more affordable option.
Reverse Mortgages Have Higher Interest Rates
DEPENDS. While interest rates are typically a bit higher than a traditional mortgage, the difference is not excessive. It is important to remember that monthly mortgage payments are not a viable option for most retired Canadians. In addition, there are many who struggle to even qualify for a traditional mortgage. For these reasons, many retired Canadians are choosing reverse mortgages over conventional solutions.
You Cannot Pass on Your Home
FALSE. Another myth is that your children will not be able to inherit your home if you utilize a reverse mortgage. This is not the case as your heirs will always have the option of keeping the property by paying off your reverse mortgage after you pass away. Adding on, if you have a “No Negative Equity Guarantee” in your reverse mortgage contract and the mortgage amount due is more than the gross proceeds from the sale of the property, the lender will cover the difference between the sale price and the loan amount. Therefore, you will never owe more than the fair market value of the home.