Refinancing can be a great way to save money or get more value out of your loan. But when you are thinking about refinancing, don’t just be looking for the lowest interest rate. Make sure you have a long-term refinance plan.
What do you want?
Are you considering refinancing because you want a better interest rate? Or better customer service? Maybe you really want to consolidate debt or draw on equity. Perhaps your real goal is greater flexibility, or you just want lower fees.
As you consider what you really want, be sure to think about the entire life of the loan. Take a good look at any fees associated with refinancing, as well as fees that the new loan will carry. And think about how long the loan is going to last, and whether you’re looking for fixed or variable rates. These factors affect your financial future.
Know what you want before your compare options. That way, you know what you’re looking for.
Is this the right time?
Refinancing can save you in the long term, but if you refinance too often, or too close to selling the property, you may never reap the benefits. In fact, you may not even recover the time and money spent on the refinance.
However, there are also times when refinancing fits beautifully. If your work situation improves, you stand a good chance of finding a better rate. If you want to renovate or invest further, refinancing can help you raise the capital you need.
It’s also a good idea to consider refinancing every few years anyway. The market keeps marching forward, and even if you are happy with your current loan, you may find a much better option available to you. Fit a three-yearly refinance consideration into your long-term refinance plan.
The first step to refinancing is to talk to your mortgage broker and discover what possibilities exist for you. Your mortgage broker’s job is to know the market and help you develop your plan.
If you want to develop your long-term refinance plan, contact us today.