Deep Thought Required When Refinancing Your Home

Did refinancing your home loan come up in your thoughts lately? For a number of reasons the warm seasons of the year are busy times in the real estate market for both sellers and buyers – and homeowners, too. For one thing, the weather allows folks to get outside and start doing stuff around the old homestead. This is the time of year when school kids are looking forward to the end of classes and parents see that as a good time to move. And, as with all new beginnings, it might be time to think about refinancing your home loan.Mortgages Up for RenewalAlso, many folks purchased their homes during the warm seasons and their mortgages are coming up for renewal. It may be time for you to visit your mortgage specialist and discuss refinancing your home loan. Before you do that, you and your partner should sit down and make an assessment of your current fiscal circumstance and think once again about your short- and long-term goals. Address these questions:- Is this home suitable for me and my family now and in the future?- Will work or family needs require me to move any time soon?- Am I able to pay all my monthly obligations and still save for emergencies or large purchases?- Are all my debts other than my mortgage at reasonable rates and will they be satisfied in the short term?- If renewal is not imminent, what are my penalty charges to opt out of the term, or should I blend the interest rate?Rolling these issues around in your mind will help you decide if refinancing your home loan is a good idea.Reasons for Refinancing Your HomeWhen looking to refinance a loan, these are all ponderous considerations. Of course, you know that refinancing is the process of getting a new home loan or adding to the present one for needed funds. If you have equity, there are a number of reasons you may want to consider refinancing your home loan and take advantage of low interest rates. For instance:- Home Improvement - Debt Consolidation - College Expenses - Vacation Home - Real Estate Investment - Other Investment OpportunitiesRefinancing CalculationsBefore your decide on refinancing your home loan, do the following calculation:Current Mortgage at Current Rate (until end of term) = X (Your figure)New Mortgage at New Rate + Penalty (until end of term) = X (Your figure)Now, if a new home loan ends up lower than your present mortgage, you will probably offset the penalty. In other instances a refinance of your mortgage may make sense.Maybe a reduction in your monthly payments is high enough that you will be able to set cash aside to save for other goals such as a rainy-day fund, a nice-to-have large purchase (boat?), or towards your retirement. Sadly, sometimes a life situation, such as a job loss or severe illness, requires alleviation by a new loan.Other Refinance ConsiderationsSay you are financing over 80% of the value of your house when you are considering the refinancing of your home loan. This means your mortgage is over 80% Loan to Value. If that is the case, you should consult a mortgage specialist regarding the possibility or porting and blending the premium. Sometimes it does not play out, even with the offset of the penalty, because of the CMHC/Genworth premium.But, having 20% equity in a home property means there are many bendable programs with lenders that can lead you to use LOC options and Visa's, thereby keeping your borrowing expenses on the low side. You will never have to pay too much interest if you have this all set up and you decide to make a large purchase or do a debt consolidation. This is another consideration as you ponder the refinance of your home loan.Refinance Considerations when Moving Away or Moving UpPeople often like change, need change, or deserve change. If you are considering leaving your current home for whatever reason, refinancing to use equity could put a homeowner in a spot where the sales profits will not be adequate for a new down payment. You need to be candid with your mortgage specialist when discussing future house-buying possibilities. And certainly presently if your are really serious about refinancing your home.