With today’s low mortgage rates, refinancing your mortgage can be a very good option to save money. At the beginning of 2012, interest rates are now at historically low levels in Canada. 5 year fixed rates can be found as low as 2.99% while variable rates are around 2.85%. As home prices have increased across Canada, many borrowers now have the equity in their home to refinance a mortgage and payoff higher interest credit card debts and other loans.
The amount of monthly cash flow savings that can be achieved with a mortgage refinance is on average $500 – $1000. This is a substantial amount of savings for the average borrower. In general, credit cards tend to have the highest monthly payments and interest rates, so these items should be paid off first. After credit cards, the next items are normally credit lines, car loans, student loans and personal loans. You can also consider to refinance a mortgage if you need money for investing, home renovations, buying another property, buying a car or for any other use. Take advantage of today’s low mortgage rates for any purpose that will help increase your net worth.
A good credit score will be required to qualify for a low rate mortgage refinance. On average, the FICO score will have to be 650 or above to get approved by most lenders, for up to 85% LTV financing. An appraisal of property will also be required either by CMHC/Genworth or by a certified appraiser in Canada. When submitting an application to a mortgage broker, please use a conservative property value so the numbers are realistic. Qualifying for a mortgage amount is currently calculated at around 5 to 6 times your gross annual income level. So for example, if your income is $50,000, you can qualify for around $250,000 to $300,000 loan at today’s mortgage refinance rates.
The typical refinancing takes about 1 or 2 days to get approved and 10 – 14 banking days to close. Legal fees are normally around $700 to close the mortgage. Appraisal fees are around $300. Considering the amount of savings that can be achieved by paying off high interest credit debts, refinancing a mortgage can be well worth the small fees. Have a look at your current financial situation today and if you believe you are paying too much for debt payments, consider using low refinance rates to save money.
