Monday, August 27, 2012

Should I Refinance? Blog Series Part 4 – How to Get a Mortgage with Bad Credit


Are you a homeowner that is asking yourself “should I refinance” but know that your credit is in bad shape? Know that there are funds that you need but afraid your credit will prohibit you from accessing them? Don’t worry. There are many lenders out there that are willing to work with you even though your credit may not be perfect, and show you how to get a mortgage with bad credit.  

Credit can be bad for any number of reasons. Things like job loss or divorce can leave you in a financial position that has you struggling to pay your monthly bills. Some things are unavoidable, but this doesn’t mean you don’t deserve to have a roof over your head and the financial ability to survive. Thankfully, many lenders recognize and appreciate this and can help you get a mortgage with bad credit! 

Has poor credit forced you to claim bankruptcy or obtain a consumer proposal in the past? Chances are, you are trying your best to rebuild that less than perfect credit. This is all taken into account when you approach a mortgage broker. Your changing payment history will reflect these efforts, so know that lenders can see it.

Don’t know if you have bad credit? One major thing to think about that impacts your credit is your payment history. Have you habitually made late payments, or failed to make payments on a regular basis? Are you continually at the max on numerous credit cards, or are you going over your credit card limit? If you answered yes to these, chances are your credit is in less than perfect shape.

If you think you might have bad credit, or know that you do, again, don’t worry. Banks are no longer the only institutions– or even the institutions with a strong monopoly- in the area of mortgage refinancing. There are many different lenders that are willing to help you and approve your application for refinancing, and your mortgage broker can help you find them and access these funds.

Although the interest rate on refinanced mortgages obtained with bad credit is higher, it can be a good motivator to get the mortgage paid off faster. Knowing that you will end up paying more interest the longer it takes to pay off the mortgage, getting a mortgage with bad credit might be incentive enough to make you pay off the mortgage faster!

Also important when considering applying for a mortgage with bad credit is that your mortgage broker can work with you by going through your finances and can help you work on a plan to rebuild your credit. Setting up a budget and looking at different strategies and approaches to paying off debt and helping you in achieving and maintaining a high credit score is  something that a professional mortgage broker is trained to do.

Refinancing your home to cover various different costs in an important decision, but as a homeowner you should be able to access the value in your home.

For more information about what your answer to the question “should I refinance” might be, and how to get a mortgage with bad credit, please contact Paul Mangion at 416-204-0156 or visit www.themortgagecentretoronto.com

Monday, August 20, 2012

Should I Refinance? Blog Series Part 3 – Refinancing Your Mortgage to Consolidate Debt


Are you a homeowner with substantial debts? Have you asked yourself “should I refinance” and use that money to pay off my debt? Refinancing your mortgage to consolidate debt might be a good solution and could save you a lot of money.  

Paying credit card debt by refinancing your mortgage means that you are accessing the equity in your home – using the value of your home – to borrow against. This can mean that a substantial amount of money is available for you to use to pay off your debt. So what are the benefits of doing this? 

Firstly, say for example you owe 40 000 in credit card debt. All cards have minimum monthly payments that you are required to make – but these do not in their entirety go onto your outstanding balance. Monthly payments are usually made up of interest and payment on the balance, however, the majority of this goes to interest, meaning that you are actually only putting a tiny amount onto the outstanding debt. That 40 000 dollars can take way too long to pay off!! Since credit card interest is often very high, refinancing your mortgage to consolidate debt allows you to save a lot of that interest.

Secondly, refinancing your mortgage to consolidate debt allows you to lower you monthly payments considerably in order to avoid the accumulation of more debt. If you are struggling to make the minimum payments, chances are your debt isn’t actually decreasing at all, and you may just be increasing it through continued use. By consolidating your debt you are able to reduce your monthly debt payment and take control of your financial situation. Furthermore, since your required monthly payment is lower, you will have extra monthly cash flow and when able, can just pay more directly to the balance owed.

Another good reason to refinance your mortgage to consolidate your debt is to improve your credit. Even if you make the minimum required payment on each of your credit cards, having several cards with high balances can negatively impact your credit rating. High balances make it seem as though you are unable to manage your finances in relation to your monthly income, and therefore you may seem like a high risk investment. By refinancing your mortgage and using the value of your home to pay off debt, you can fix this problem.

Banks versus a mortgage broker – which option is best? Since this is a financial issue, your first thought might be to go to the bank and try to get a consolidation loan. However, as a homeowner, there are far better options available to you. Since banks are often the financial institutions that control your credit cards, it is in their best interest to keep you paying the minimum monthly payment (much of which is just interest). It means way more money for them if you just continue to pay interest. Banks are also often much stricter when determining who qualifies for a loan, and so going to a mortgage broker means a better chance of getting the money you need to get those debts under control.

There are many things to consider when asking yourself “should I refinance.” Refinancing your mortgage to consolidate debt can be an important solution to getting control of your debt and saving money.

 For more information about what your answer to the question “should I refinance” might be, and how refinancing to consolidate debt can work for you, please contact Paul Mangion at 416-204-0156 or visit www.themortgagecentretoronto.com

Wednesday, August 15, 2012

Should I Refinance? Blog Series Part 2 - What is a Second Mortgage or a Second Mortgage Loan?


Are you thinking of paying off some of your debt, or need some money for major renovations or other financial needs? Are you asking yourself “should I refinance?” Well a second mortgage might be the best option for you.
Firstly, what is a second mortgage? A second mortgage, also known as a second mortgage loan, is a home equity loan that lets you borrow from your home’s equity while avoiding refinancing your first mortgage. This is important because a second mortgage lets you continue payments on your existing mortgage uninterrupted, allowing you to pay off your debt quicker, ultimately saving you interest.
Because a second mortgage is based on your home equity, the amount is based on the difference between the appraised value of your home and the amount still owing on your first mortgage. This can be a significant amount of money, and refinancing by taking out a second mortgage can be a good option for getting some much needed capital.
So what are the benefits of a second mortgage? Often, second mortgages can be important sources of income, and a lot of income. Because it is based on the value of your home, it is easy to access thousands of dollars.  An easy way to estimate the amount you might qualify for is to have an appraisal done on your home – which will be necessary once you apply.

What can they be used for? Really anything. Paying off debt is one of the most common usages of a second mortgage loan. Because the interest rate on a second mortgage loan is often far lower than a credit card, paying one off with the other can ultimately save you thousands of dollars in interest. 

Using a second mortgage to pay for a child’s tuition is also common. Chances are you have built up substantial equity in your home by the time your child goes off to college or university, and so a second mortgage can prove to be a sure-fire way to secure funding for this. For the same reason, obtaining a second mortgage loan to pay for home improvements or to open a small business is an important consideration when asking “should I refinance.”

Why not just refinance by adjusting your first mortgage? This can be an option, but often the interruption can mean a longer amortization period resulting in more interest being paid by you in the long run.  This is where a mortgage broker comes in. Let them go through all of the options available to secure the best mortgage product to suit your current financial needs and goals.

As a homeowner, you have worked hard to make a dent in your existing mortgage and have thus created equity. This home equity can be an important source of income when it comes to a second mortgage loan. 

For more information about what your answer to the question “should I refinance” might be, and what a second mortgage is, please contact Paul Mangion at 416-204-0156 or visit www.themortgagecentretoronto.com  

Thursday, August 9, 2012

Should I Refinance? Blog Series Part 1 – How to Get the Lowest Mortgage Rates


With interest rates currently very low in Canada, refinancing to get the lowest mortgage rate may seem like the best idea to save yourself some money. The benefits from refinancing your mortgage can range from getting a better, lower interest rate, to shortening the length of the loan period. However, when asking yourself “should I refinance,” there are several different things that need to be considered, not just the rate of interest, to ensure that you are getting the lowest mortgage rates! 

There are many different reasons that refinancing your mortgage may be a good idea, and a lower interest rate is not necessarily the best one. Switching from a variable rate to a fixed rate mortgage or adjusting the length of your mortgage term are two important examples. These can significantly impact your mortgage interest rate.

Should you refinance? Of course, a lower interest rate can mean the lowest mortgage rate for you. Obviously, if your rate is significantly higher than those now being offered, it may save you thousands to refinance based solely on the current interest rates.

Has your credit improved significantly since you first got your mortgage? If it has, you may find that refinancing your mortgage is a good way to secure the lowest mortgage rate possible. Chances are, if your credit was not the best that it could have been when you were first approved, you are currently paying a higher rate of interest. Coupled with a lower interest rate, refinancing because of improved credit can definitely mean getting the lowest mortgage rates.

Switching from a variable rate to a fixed rate mortgage is a great way for people to get the lowest mortgage rates. If you currently have a variable rate mortgage, then your rate is not locked in, and once the interest rate goes up you will end up paying more. By switching to a fixed rate mortgage when interest rates are super low, you can ensure that you are getting the lowest mortgage rate. Taking advantage of low interest rates in this way can mean that refinancing will get you the lowest mortgage rate.

Shortening the amortization period of your mortgage can also significantly reduce your mortgage rates. For example, if the length of your loan is 30 years, you will pay a great deal more interest than if it was 25 or 20 years long. Even if you are getting the best possible interest rate, having a loan term of 30 years does not necessarily mean you are getting the lowest mortgage rates! If you have the financial ability to pay the higher monthly payment that accompanies a shorter amortization period, you can save yourself thousands in interest. In this case, the answer to the question ‘should I refinance’ might definitely be YES!

As you can see, just having the lowest interest rate does not necessarily mean that you are getting the best mortgage rate – especially when you are looking long term. You work hard for your money, and securing a mortgage that gets you the best mortgage rates can be achieved through mortgage refinancing.

For more information about what your answer to the question “should I refinance” might be, and how to get the lowest mortgage rates, please contact Paul Mangion at 416-204-0156 or visit www.themortgagecentretoronto.com.