Mortgages normally have a term of two to three decades. Over this period, the financial and personal situation of the homeowner may change considerably. For starters, the borrower may have several more kids. They can also lose their job and get a different job with a lower income. However, other borrowers may get a better job with a better pay. Whatever the case, it is important to note that property owners can refinance their mortgage when the need arises. Below are the key reasons why a person may want to refinance their house:
i) To Lower Monthly Installments
If you have been wondering – how do I refinance my house Calgary – read on to find out. If the monthly installments you normally pay towards offsetting your mortgage have become unaffordable for you for one reason or another, you can refinance your house to reduce the monthly installments. This will be done by stretching out the outstanding mortgage balance over a longer period of time. As a result, the number of installments will increase, thereby lowering the value of each installment. This will make it easier for you to repay the loan.
ii) To Reduce Interest Rate
One of the main goals of refinancing a mortgage is to lower the interest rate you are currently paying. If the interest rates in the market are lower than what you are currently paying on the mortgage, refinancing may be a great idea. Most lenders will be willing to refinance your mortgage with improved terms especially if you have a high credit score. An interest rate reduction on a mortgage can translate into thousands of dollars in savings over time.
iii) To Lock Interest Rate
If you have been paying a fixed mortgage rate, you can refinance to lock-in on a low mortgage rate. This should be done when market rates are at their lowest. By locking the rate, you will pay a low interest rate regardless of market volatility, economic conditions or changes in your credit rating.
iv) To Get a Loan
If you need to borrow a second loan against the equity you have on the property, you can consider refinancing your home. For instance, if you have built up $100,000 equity in your property through regular monthly payments, you may be able to borrow the full amount or up to 90% of the equity, depending on the lender. You can borrow to buy a second property to rent, to pay tuition fees for kids, or to use for any other reason that you may have, personal or otherwise.