Mortgage Refinancing FAQs
What is mortgage refinancing?
Mortgage refinancing is when you create an entirely new mortgage loan by modifying or adjusting existing loan terms. Your new loan thereby replaces the old one. Homeowners generally seek mortgage refinancing when they want a better interest rate or a reduced monthly payment. However, doing this may extend their term, as if they were starting from the beginning. If you are looking for a lawyer for refinancing your mortgage in Toronto, we can help you with the ins and outs of this process.
Do I need a real estate lawyer when applying for a mortgage refinance?
The answer to this question depends on your experience level and how complicated your mortgage transaction may be. If you have solid credit and want to refinance, you may be able to do this on your own; however, a first-time homebuyer or someone seeking to quickly close a transaction may need the assistance and advice of a mortgage agent or real estate lawyer. If you are unfamiliar with the process involved in mortgage refinancing, a broker can advise you on how you can get a loan and will give you a fair estimate of the cost. A real estate lawyer will also identify and explain any fine print details you should be wary of.
Why should I refinance?
Knowing whether you should refinance or not depends on a few things. First, you must determine your mortgage-related financial goals. For example, are you looking to improve your monthly cash flow, or reduce your term, or do you need cash from your equity? Even if rates are not at their lowest levels, you can obtain the right mortgage for your specific needs. Identify your goal and contact a mortgage officer for tips on programs that would help you meet your objectives the best. Then you can shop for rates once you’ve chosen the right mortgage program. Here are some of the benefits of refinancing:
- Reduce your interest rate
- Reduce risk with a fixed-rate loan
- Reduce your mortgage terms
- Get cash-out refinancing to remodel or renovate your home, pay your child’s tuition, etc.
What documentation is typically required to process my mortgage refinancing?
Depending on the quality of your credit and the amount of equity you have in your property, you may need to provide one month’s current pay stubs, T4 slips for the previous two years, and bank/investment account statements for the previous two to three months. If you are self-employed, additional documentation may be required.
Can I reduce my payment with a mortgage refinance?
You can do this by lowering the interest rate and/or extending the maturity date. Ask our mortgage refinance lawyers in Toronto for advice.
What do you charge for refinancing?
We approach mortgage refinancing the same as we do for purchases and sales by providing fixed closing costs of $799 for all fees and disbursements, plus HST, title insurance, and registrations to complete most refinance transactions.
Can I still refinance if I have a second mortgage on my home?
Through refinancing you may be able to pay off your second mortgage. One method is to consolidate both loans into one new first mortgage, giving you one easy payment per month. If you want to keep your second mortgage intact, you may be able to speak with your second mortgage lender and ask them to remain in second position to allow us to refinance the first loan. Known as subordination, this process typically come at an extra fee charged by the second mortgage lender.
Can I refinance with bad credit?
There is an approval process for refinancing because it creates a new mortgage loan. During this application for a new mortgage, the lender will check your credit and income. If you have bad credit, it may prevent a refinancing, especially since many lenders look for higher credit scores for these types of loans.
Do I need a home inspection before applying for a mortgage refinance?
Getting an appraisal is necessary before you refinance your mortgage so that the bank or your lender can check the general condition of your home before they loan you money for the property. The purpose of this is to come up with a comparable market value.
How much home equity do I need to refinance?
Your home will be most eligible for refinancing when you have 20 percent or more equity in your home. You can acquire equity in three ways:
- Buy it using your down payment.
- Pay the premium down on your property.
- Get equity if the value of your home increases.
For these cases, the lender will need the current appraised value of the home before refinancing. If your equity is less than 20 percent, you may still be considered for a refinance if you get private mortgage insurance (PMI).
Do I have to refinance with my current mortgage lender?
Although there is no rule stating you must refinance with your present lender, there are many benefits to doing so. They are already aware of your payment history, and if you’ve been a loyal customer, you may be able to get the best rate. That being said, comparing mortgage loan quotes from a few different banks will ensure you really get the best rate available.
What is your process of mortgage refinancing?
Our mortgage refinancing process is similar to what you experienced selling your home. There are a lot of aspects to refinancing a mortgage and our lawyers can help you deal with the availability of mortgage refinancing; foreclosure sales and junior mortgages; expediting the process; negotiating contract terms; and other aspects of mortgage refinancing laws. Depending on the type of refinance you need (ie. residential mortgage, commercial mortgage refinancing, non-mortgage refinancing, construction mortgages, etc.) we can help you navigate the legal documents you need to sign. With us, you will pay a fixed closing cost.