Refinancing your mortgage can be a great way for you to gain finances to consolidate debt, complete a home renovation, or pay for your children to attend post-secondary school. For many homeowners, refinancing can be cost-effective; however, to find out if refinancing your mortgage is the best option for you, you need to first consider the interest rates and other mortgage refinancing fees involved, and compare these costs with other options available to you. Here’s what you need to know about mortgage refinancing costs and how you can avoid them.
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Mortgage Breakage Penalty
When you end a mortgage contract before the end of the term, there is something known as a mortgage penalty. A mortgage penalty is usually calculated by using an interest rate differential, or three months interest. This fee is something you should consider before refinancing your mortgage.
Blended Payments
If you decide to refinance your mortgage with your current lender, you may be able to avoid the mortgage penalty. Your current provider may allow you to leave your existing mortgage at the current rate you are paying, and add the new amount at a new rate. Make sure that the mortgage rate they offer you is competitive, and if it is higher than most current mortgage rates, make sure it is worth it.
Mortgage Default
You will need to pay mortgage default insurance if you refinance your mortgage at a loan to value ratio of 80 to 90 percent. How much you pay depends on your specific ratio and any insurance you had on your previous mortgage.
No Cost Refinance
Mortgage refinancing always involves at least some incidental costs. These include new mortgage registrations, title searches, and title insurance for the bank. If you are refinancing internally through a bank, sometimes they will offer to cover the costs of the refinance. In other instances, the costs are rolled into the mortgage. That is, while there are some costs, you will not pay them up front as you would essentially be borrowing these as part of your mortgage. Always check what the costs are going to be of completing your refinance. Our fixed closing costs on a typical refinance are $799 for all fees and internal disbursements included.
Prepaid Costs
Depending on your closing date, you may need to repay the interest that you owe from that day until the end of the month. This amount is added to your closing costs, so if you close on the first of the month, you will still have 30 days of prepaid interest. If you are getting a loan of $400,000 or above, this can be a large sum of money.
Get Mortgage Refinancing at Zinati Kay
If you are considering refinancing your mortgage, you need to make sure that you do your due diligence to learn about your options and make the best decision for yourself. It’s wise to seek professional advice when making such large financial decisions such as this. Since refinancing your mortgage comes with additional costs and can bring about various legal issues, working with the professionals gives you a huge advantage.
Consider Zinati Kay – Real Estate Lawyers when refinancing your mortgage. We can help you understand the ins and outs of the process, and can provide the best options and solutions for your unique situation. We are a full service residential real estate law firm that provides fixed closing costs to buyers and sellers when they buy, sell, mortgage, or title transfer their property. We provide professional service and reasonable real estate lawyer fees and have thousands of satisfied clients to prove it.
Please feel free to contact us at (416) 321-8766 or at info@zinatikay.com for a quote on your refinance transaction or to find out more information about our services.