Refinancing is good for more than just mortgage rates

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Ultra-low mortgage rates aren't just benefiting homebuyers. Current homeowners looking to save money on their monthly mortgage payments are taking advantage of low interest rates by refinancing. However, saving on mortgage rates isn't the only reason to consider refinancing. The act of refinancing provides mortgage holders with a number of options, and it's a good idea for all homeowners to explore these. Even if taking out a brand new mortgage to replace a current one doesn't make sense based on interest rates alone, the other opportunities refinancing provides should not be ignored. Continue reading

Dealing with mortgage payment difficulties

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No matter how low the mortgage rates are when you take out a home loan, unforeseen financial changes can make keeping up with your payments an obstacle. Our lives are not static, and something as innocuous as a plumbing bill or abrupt as an emergency car repair can make staying current with a monthly mortgage payment difficult. Fortunately, there are a number of strategies to deal with mortgage payment difficulties.

The first thing a borrower should do if they find themselves facing financial trouble is speak to their lender. Mortgage lenders want to keep their investment safe, and they will work with a borrower to manage whatever financial difficulty has arisen. By being proactive and getting in touch with your lender at the first sign of trouble, you can begin exploring options and receiving help before things get out of hand. Continue reading

When to refinance

While Canada’s housing market remains in the spotlight, most of the speculation revolves around home buyers. Newspaper articles and blog posts cover every angle of the industry, discussing sales numbers, home prices and how they affect prospective buyers. However, one segment of the population is being overlooked when it comes to the opportunities the current market offers: homeowners.

Despite tighter mortgage restrictions leading to a cool down in buying and selling, government regulations have done nothing to raise the ultra-low mortgage rates Canada is currently experiencing. While the fluctuations in the market make it that much harder for prospective buyers to decide on a plan of action, the window of opportunity for current homeowners has remained open wide with no immediate signs of closing. Continue reading

Now is the time to refinance

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Taking out a mortgage can be a long and arduous process. First you have to decide what kind of mortgage you need. Then you have to search for a lender. Then you have to qualify. Then comes the paperwork. Once the process is complete, chances are you’re looking forward to not worrying about it for as long as possible.

So why would people voluntarily go through the whole process again? To save money, of course.

What is refinancing?
Essentially, refinancing your mortgage means paying off your original loan and taking out a new one. Homeowners do this in an attempt to lower monthly payments, reduce interest rates, take out home equity or change mortgage companies.

Lowering rates
While there are numerous reasons to refinance, interest rates are where the primary savings can be found. Depending on the length of your loan, interest rates can add up to exorbitant amounts on top of the money you already owe. For buyers with less-than-perfect credit scores, low interest rates are often out of reach. After making good on your mortgage payments and improving your credit history, refinancing offers the perfect way to translate your financial responsibility into a money-saving resource. When you qualify for a lower interest rate, not refinancing your mortgage is as good as throwing money away. Continue reading

Refinancing vs. Modification: Which is best for you?

Large mortgage payments and high interest rates can lead to serious distress for your bank account. Mortgages are the most formidable kind of debt for homeowners, and figuring out how to cut down on its cost while paying it off is vital for healthy finances. One way homeowners ease economic burden is by exploring loan modifications and refinances. The intricacies of each alternative might seem overwhelming to homeowners without experience, but it’s important to figure out what each avenue offers and whether or not it’s the right fit for you.

Loan Modifications
Loan modifications involve a lender changing the terms of your existing mortgage. These are often for short periods of time, focusing on helping a borrower get back on their feet financially. Despite the new terms, your original loan is still in place. Modifying your loan means working with your current lender, as they are the ones making changes to your loan terms. Continue reading

A bit of preplanning can prevent expensive mortgage fees, penalties

These days everything is about cost – the cost of metropolitan living vs. rural, increasing home prices, how expensive it is just to buy food to, you know, survive. So why are so many Canadians making the mistake of paying more than they have to for mortgage penalties, especially when those costly mistakes could be avoided by asking a few simple questions?

Believe it or not, there are hidden costs associated with mortgages that may really only seem hidden because buyers didn't think to ask about them or do sufficient research when buying a home. According to FICO, most buyers are so concerned with interest rates and down payment amounts that they simply forget that other factors may affect fees and payments.

Interest rate differential charges are not your friends
Less-experienced buyers may not be familiar with interest rate differential charges (IRD), which commonly cost homeowners thousands of dollars. In short, IRD charges give money to the lender when borrowers try to prepay on a large mortgage, equaling the difference between interest promised to a lender and what they can earn right now on a comparable mortgage. Continue reading

Tips for a mortgage-free future

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Many Canadians expect their mortgages will follow them around for a while, but a new poll of savvy consumers reveals some of the ways homeowners have gotten out of debt quickly.

The Canadian Imperial Bank of Commerce survey finds that while most Canadians who currently have a mortgage anticipate paying it off around the age of 55, those respondents who have already paid off their mortgages were able to do so by 48, on average. These consumers took a few extra steps that helped them achieve financial freedom sooner than expected, like making yearly lump sum payments whenever possible or increasing the amount of their monthly payments. More than half of this group also said they skipped making large purchases and created a budget to help track their payment goals.

"Being mortgage-free is a top financial priority for many Canadians, and this poll suggests that by having a plan, Canadians may be able to pay off their mortgage sooner than they anticipate," said Colette Delaney, executive vice president of the mortgage, lending, insurance and deposit products division of CIBC. Continue reading

How to Calculate Mortgage Penalties

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There are numerous good reasons as to why mid-term you may be considering the option of breaking your mortgage. You may have found yourself in need of extra finances, have located a much better rate, are aiming to consolidate high interest debts, are interested in early renewal or are paying out the balance of your home loan early.

Before you make your decision, you will need discuss the option with your mortgage broker and weigh the mortgage penalty fee against your potential future savings.

The Mortgage Penalty Calculator is a helpful resource Canadian Mortgage Trends has supplied to Canadian mortgage holders amid these important considerations. The calculator can provide you with an estimation of what your penalty fee will look like as you determine your best financial route. Continue reading