Most of you are familiar with mortgages. It involves taking a loan with a property of yours being placed as mortgage which the lender would have the right to sell if you default on your loans. But what is ‘Refinancing Mortgage’? This financial device is fast gaining popularity and becoming common in Canada through Mississauga mortgage refinancing brokers. Let’s understand what this term basically means.
Introduction to Refinancing Mortgage
To put it in the simplest possible terms, refinancing mortgage means paying off a loan that you have taken by replacing it with a new one. On the face of it, it may seem like a ludicrous idea. What’s the point of paying off a loan by taking a new loan? But on closer inspection, it becomes clear what the advantages are of such a strategy.
By taking a loan from one agency to pay off another from a different one allows you to change the conditions of mortgage that you are working under. The new loan may have a lower interest rate, better terms of repayment and other benefits.
This is why many mortgage brokers in Mississauga have seen this opportunity and have produced schemes which allows borrowers to shift from adjustable rate mortgage (ARM) to fixed rate mortgage (FRM).
Precautions to Take While Refinancing A Mortgage
On the face of it, it may seem that refinancing is an unalloyed good for anyone struggling with his mortgage payments. However, on close inspection of Mississauga mortgage refinancing brokers’ terms, it becomes clear that there are risks associated with it also. Very often, making an immediate payment get rid of your existing loan comes with a fine or penalty. This clause if inserted in mortgage agreements by mortgage refinancing brokers Mississauga quite often.
Do make use of the services of an attorney along with Mississauga mortgage refinancing brokers to make sure that you are ending up getting a raw deal. Make sure the fine you are paying does not completely offset the benefits you are receiving due to the change of the terms. If you can be sure of this, refinancing your mortgage through mortgage refinancing brokers Mississauga is not a bad option.
