The cooler temperatures, changing colours, and hint of holidays make fall a favourite season for a reason. Along with the changes in weather patterns, sometimes the real estate market sees a shift as well. If you’re a homeowner, perhaps you’re wondering whether you should make a seasonal change to your mortgage. Refinancing your mortgage might be a good option for you this year, but only if you have a compelling reason. Here are some signs it’s a good time to refinance!
You have a stable income
You need to be in a financially stable position if you want to refinance. When you refinance, you’re making some form of change to your current terms. This means you need to prove you have the income and financial stability to make whatever alteration you desire. You will need to prove you have a steady income flow, that you’re employed, and that you have a good credit score. Just because a lender approved your mortgage once doesn’t necessarily mean they will automatically do so again, especially if your situation has drastically changed. Lenders want to make sure you won’t suffer a loss of income before they refinance your mortgage, in case it results in you being unable to make your payments. So, ideally, you should be sure you have a firm employment and income before applying for a refinance.
You can secure a better rate
You shouldn’t refinance for no reason at all. As beneficial as it can be, it’s still a bit of a process that doesn’t pay off without a strong cause. For example, one of the most common reasons people refinance is to get a better rate on their mortgage. Lower interest rates of course mean lower monthly payments, which will save you money over time. Depending on how long ago you locked into your current terms, you might be able to secure a lower rate today. Fixed rates are rising, but in general, rates are lower today than they have been in the past. The opportunity to save money, and prevent more spending on your mortgage, is a compelling reason to refinance.
Of course, breaking your current mortgage terms can result in penalties. It’s important to be sure you’ll be saving more money by refinancing than you may have to pay in these fees. Otherwise, it might not be a great time to refinance.
You have long-term plans for your home
You wouldn’t take the time to upgrade your phone’s accessories or software if you planned to get rid of it in a month. The same can be said for your home. Don’t refinance if you don’t plan to stay! Refinancing is a long-term option for people who are going to remain in their homes and want to take advantage of the equity they’ve built. Breaking your terms once for a refinance is one thing. If you decide to sell and move, you’ll be breaking them again. Those fees will almost certainly not be worth it. Plus, the process of refinancing will be too much of a hassle if you don’t plan to fully enjoy its potential benefits down the road.
You want to do renovations
Renovations seem to be a common part of each home’s life cycle, and most home owners do some renovations at some point. If your renovation plans happen to coincide with your plans to refinance, this could be great timing. Refinancing can give you access to any equity held in your home. This increased cash flow helps you access the funds you need to do any home projects, which, after all, can be very pricey. This is a win-win situation, since you are accessing the benefits of refinancing and using the process to improve your home.
You need to rework your terms
Our needs change over time, and our mortgage requirements are no different. Maybe you’ve realized you want a longer term length, you want more prepayment options to shorten your term, or you want to switch between a fixed-rate and variable-rate mortgage. Whatever the case, this is where a refinance can be handy. It may be time to refinance if your current mortgage terms no longer reflect your needs. If the timing is right, and you think a certain change would be a big benefit to you, meet with a broker to discuss it!
This fall could be an excellent time to refinance your mortgage if you’re hoping to make changes to your current terms, or access home equity. Refinances aren’t generally recommended without a specific purpose, but any of the circumstances mentioned above can be great reasons to consider this option. If you have questions about refinancing your mortgage, get in touch with me!