Refinancing your mortgage is a great option for a number of reasons, including debt consolidation, completing a home renovation project or sending your children to university or college. Refinancing can provide you with the money you need and while it’s a fantastic idea that many homeowners can consider, it’s important to understand that there are costs associated with this option and, in many cases, it may not be as cost-effective as you may think.
In order to determine whether or not refinancing your mortgage is right for you, all of the costs have to be considered to see if this is, in fact, the best route for you to pursue. Appraisal and inspection fees will be required as most lenders will want a new home appraisal to be completed on the property being refinanced, so they can determine its value. The costs will vary but in most cases, will have to be paid up-front.
If you need to break your current mortgage contract in order to refinance, you may be required to pay a penalty fee. This is called a prepayment penalty that must be paid to your lender and is just another one of the costs involved in refinancing your mortgage. The amount will vary from one homeowner to another because it is based on when your original mortgage contract was signed, the term of the contract as well as the balance of the existing mortgage and its rate.
Mortgage registration fees are another cost you have to factor into your decision because this fee will have to be paid regardless of you leaving or staying with your current lender. They will have to remove the current mortgage amount from the title on your property and re-register it with the new mortgage amount, so this fee cannot be avoided.
Lastly, legal fees are also part of the equation because you will have to consult with a real estate lawyer when you refinance your mortgage. Your lawyer will be the one who reviews your mortgage loan along with its terms and conditions and they will also register your new mortgage and conduct a title search to make sure there are no issues with your property. A lawyer is necessary because they will ensure the process is smooth by facilitating the financial transaction between the client and the lender. Legal fees vary but are part of the refinancing process.
Refinancing your mortgage is a great idea but only if it makes sense, so before you make your decision, you must take into account all of the different fees you will be required to pay so that you have a clear idea regarding just how much the process will cost.
Mortgage Makers in Edmonton offers a variety of useful services, including second home mortgages and excellent rates, so if you want to have the best mortgage broker on your side, give them a call today and they’ll help you make the right decision.