Refinancing Your Home
“To Refinance or Not, That Is the Question.” Not quite what Shakespeare wrote in his play, Hamlet, but
to the question is an important one. There are times during your life when you may want to consider
refinancing your home, and the Wilson Team of Mortgage Professionals is here to assist you in deciding
if and how to proceed.
Why would you want to go through the paperwork and hassle of getting a new mortgage? There are
many reasons why refinancing can be beneficial, including:
To get a better interest rate and save money in the long term;
To switch from a fixed-rate mortgage to a variable rate, or vice-versa;
To fix your credit score;
To consolidate multiple mortgages;
To pay off debt;
To buy out a spouse (see spousal buyout);
To fund a child’s university tuition
To buy a vacation property or a home for university-age children (Add links); or
To put away some money for emergencies.
If you’re hoping that refinancing will provide you with additional funds for debt repayment or extra
projects, such as renovations, ask the Wilson Team about a cash-out mortgage, a new mortgage that
replaces the old with different terms and a larger sum of money. Once you’ve paid off your old
mortgage and related fees or taxes, the remainder of the money is yours to spend as you see fit.
Deciding whether to refinance your mortgage shouldn’t be a snap decision, and you shouldn’t do so in
order to purchase an asset/object whose value will deplete over time – a fancy car, for example.
Perhaps you can get the money you need from an alternative source, such as a home equity line of
credit (HELOC), so talk to the Wilson Team of Mortgage Professionals to assess your options.
Determine whether you can afford the monthly payments that your new mortgage will require.
Remember, there will be costs associated with refinancing your home, including an appraisal and legal
fees, so add these to the cost of the transaction.
Also, be certain that your credit score is respectable; if not, you’ll need to rehabilitate it before applying
to a lender.
Once you decide that refinancing sounds like a viable option for you, you’ll need to have your ducks –
and your paperwork – in a row. This includes determining whether there will be a penalty for pre-paying
your existing mortgage and determining how much additional cash you need/are eligible to receive.
Here are the Wilson Team’s 10 Tips for Making Refinancing Pain-Free:
1. Know your Credit Score: Credit Karma (www.creditkarma.ca) is free and will help you calculate
this key number, which your lender will require.
2. Know what is your home worth – check MPAC, ask you local realtor, obtain an appraisal
(arranged by the Wilson Team), ask a broker who can check online for you.
3. Know you’re the details of your current mortgage: your rate, your remaining amortization, the
term of your existing mortgage, and the full payment, excluding property taxes.
4. Know your annual property taxes.
5. Know the penalty for paying off your mortgage early. It could be as low as three months’
interest and as high as five per cent of the mortgage balance. This is solely dependent on your
lender. Banks penalties are generally much higher than their lending competitors (See attached
6. Know how much you’ll need to pay for legal fees, title changes, appraisal costs, and land transfer
taxes. All of these could be applicable. Ask your broker and some fees may be paid up front on
7. Have all your paperwork ready, including your current mortgage agreement, the title to your
home, your property tax bill and proof of income.
8. Know your break-even point. If the new deal doesn’t meet your needs, don’t sign on the dotted
9. Don’t shop rate – there are other aspects to the mortgage, such as length of the repayment
term. Take all key factors into account.
10. Don’t time the market for rates. This is a game you can’t win. If you wait for the perfect rate,
you’ll never make a move and you also may miss out on an advantageous rate.
We at the Wilson Team of Mortgage Professionals are here to assist you every step of the way with this
process, so don’t hesitate to give us a call.