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Should you refinance your mortgage heading into the fall?

As unbelievable as it sounds, it’s almost time to start preparing for fall! This means breaking out the warmer clothes, perhaps getting ready for back-to-school, and … refinancing your mortgage?
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As unbelievable as it sounds, it’s almost time to start preparing for fall! This means breaking out the warmer clothes, perhaps getting ready for back-to-school, and … refinancing your mortgage? The fall season is often busy in the real estate market, and you might be wondering if it’s a good time to take a look at your mortgage. As always, the decision to refinance largely depends on you as we head into the fall. Here are a few factors to consider if you’re thinking this could be the right move for you!

Income & employment

Your income and employment are two of the most important factors a lender will look at when considering you for a refinance. It’s crucial to have a steady form of income, as well as a solid employment history, when applying for this kind of loan. Lenders want to make sure they’re not lending to high risk borrowers, and those with inconsistent income or who don’t have a job are more risky in their minds. Be sure to have some record of employment ready to present, as well as proof of income. 

Interest rates

We all know Canada has seen historic low interest rates since the start of COVID-19. Today, interest rates are still much lower than we have seen them in the past. The prime rate currently sits at 2.45% and the target for the overnight rate is 0.25%. If you’re considering a refinance, it’s important to see if you can secure a rate that’s significantly better than the rate you have now. If you locked into your mortgage five years ago, for example, odds are good you might be able to secure a lower rate today. You may have to spend on refinancing fees, but a refinance this fall could be a good idea if it will save you more money down the road.

Future plans for your home

Of course, refinancing can come with a penalty if the changes are made before the term is up. This means you should have long-term plans to stay in your home if you’re going to refinance. It’s only worth the penalties if you can continue building equity, otherwise you face extra fees for no reason. 

Shorten loan length

Another good reason for refinancing this fall is if you’ll be able to shorten the length of your loan. You might be able to refinance to a shorter time period, which means you’ll make bigger (but fewer) payments. This will decrease your total interest, and save you money down the road. The fewer payments you have to make, the less interest will be tacked on over time.

Debt consolidation

If you need help managing your debt, this is where a refinance can also be handy. You can refinance to combine your mortgage debt into one loan with your other debts. This results in one lump payment rather than multiple separate payments, which helps you keep track of your debts. Often, you can secure a lower interest rate as well. 

Refinancing your mortgage this fall can be a great move for you, but it’s important to seek the help of an unbiased mortgage professional before you start! If you’re considering a refinance, Clinton Wilkins Mortgage Team can guide you through the process and get you on track. Get in touch with them at (902) 482-2770 or contact them here.
 

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