What not to do when refinancing a mortgage in Canada
When it comes to mortgages, several things can go wrong, especially when you are a first-time home buyer. Refinancing your mortgage through a qualified and licensed mortgage broker makes a lot of sense when you are looking to decrease your interest rate or reduce your monthly mortgage payments. However, even when you are refinancing your mortgage, there are a few things you need to keep in mind. These include:
Refinancing at the wrong time
You should only consider refinancing the mortgage on your home if you notice a visible gain from doing so. For instance, if the interest rate of your refinanced mortgage happens to exceed your current mortgage it will hardly make any sense to switch to a new mortgage and you will end up spending more instead of really saving anything. It is advisable to only refinance if you have more than 20% equity of property or have bruised credit. Before you approach any lender, you must increase your credit score.
Refinancing shopping
Just like you will not settle for the first mortgage offer that your bank or broker gave you, you must also not settle for the first refinancing offer that you get. Try to look around and find the best offer that works for you and your needs. Use a licensed and qualified mortgage broker to get the best rates on refinancing.
Background check
Before you decide to choose a mortgage company to refinance, you must conduct a background check to be certain the company you are dealing with is authentic and they are licensed and authorized to process mortgages. Many lenders will try to entice you by giving exceptionally low mortgage rates. If something is too good to be true, it probably is. The best way to make sure that your mortgage broker is licensed and certified is to do a thorough background check. Ask for references, go through their websites and ask to see their license, look them up on the FSRA’s website.
No cost financing
You may come across many mortgage lenders who are ready to refinance your mortgage offering “no-cost” financing. Although this may lead you to believe that your mortgage is free, technically many lenders will add it in the mortgage amount. Although you may not have to pay right away, you may still end up paying. Your interest rate can also increase because of this.
Failing to lock your interest rate
Interest rates are pretty dynamic. You may be surprised how often they can keep changing. It is recommended that you must lock your interest rates as soon as possible so that if the market rates go higher, you will still be able to get a mortgage at the previous lower rate. This can potentially save you a lot of money and disappointment in the future.
Interfinance Mortgage Corporation is a brokerage who work as licensed and qualified lenders offering the best mortgage rates for many mortgage seekers across Ontario. If you are looking at refinancing your property or getting a mortgage, talk to our mortgage specialists and get the best deals for your requirements.
