When Refinancing Makes Sense

When Refinancing Makes Sense

Thinking about refinancing your mortgage?

If you’ve been wondering if refinancing your mortgage is the right decision for you, you are not alone. Many Edmonton homeowners are often unaware or unsure of when it may be financially beneficial to refinance. When considering if refinancing makes sense for you, there are three essential questions to consider:

  • Is this the right time for me to refinance?
  • Is my amount of home equity going to make it worthwhile?
  • Is this the right decision for my particular situation?

Finding the answer to these questions can be challenging, and often leaves Edmonton homeowners feeling confused and unsure during the decision-making process. This is where an experienced mortgage broker from Dominion Mortgage Pros can help.

Let’s take a look at a client situation where refinancing made sense.

We recently had a client come into our office who had a total monthly payment of $5,000.

Let’s break down this monthly sum:

  • The client owned an Edmonton property worth a total of $500,000. Their mortgage was $300,000 at a 5.5 per cent interest rate. This left them with a mortgage payment $2,000 per month.
  • The client had $55,000 owing on a car loan, with a payment of $1,700 per month.
  • The client had $20,000 owing in credit card payments, breaking down into monthly payments of $1,300.

This brought the clients total monthly payments to $5,000.

After evaluating our client’s situation, we were able to…

  • Refinance their property asset at $400,000, freeing up a total of $90,000
  • Take that money and pay off the client’s car loan and credit cards
  • Restructure their mortgage at a significantly lower interest rate of 2.9 per cent
  • Drop their previous payment of $5,000 per month to $1,900 per month.

That’s a total monthly savings of $3,100. Now that’s when refinancing just makes sense.

Refinancing makes sense when…

Refinancing makes sense when you have equity in a significant asset. You can shift that equity around to then pay off credit cards and loans which are often at higher interest rates, and finally get a payment plan for the remaining amount. This allows you to consolidate your debt, and at similar if not lower rates than your current mortgage. However, refinancing your mortgage can be complicated. There are some key factors to consider before refinancing, that’s where Dominion Mortgage Pros of Edmonton can help. Contact our Edmonton office to speak with one of our Dominion Lending experts to find out how we can make refinancing make sense for you.

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