In 2017, following the updated government policies, refinancing became a real challenge. In the past couple of years, values of homes in big cities went up drastically, allowing owners to pull equity and use it for more real-estate purchase. Although the current regulations put stricter limitations on how much a borrower can get when refinancing, we still see it as an effective tool in creating a family’s wealth.

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Traditionally, refinancing is meant to replace one’s current mortgage with a newer, larger, and usually better mortgage even before the term is to end. The process takes place to address any of the homeowner’s revised goals. Refinancing is usually done to pull equity and use it to purchase an investment property, invest in other channels, or to finance higher education for a homeowner’s children. Some homeowners will use refinancing to consolidate other debts into a mortgage that carries the lowest rate given in the market for borrowed money.
The process starts from evaluating the new value of the property. If the property gained in value, it is a sign of potential. The next step is to assess whether the borrower’s income is sufficient to support the new mortgage and what would be the associated costs of it.
In order to check how cost effective the act is, we will provide our calculations. We include the cost of breaking the current mortgage and the associated penalty of doing so, as well as the cost for a lawyer and a new appraisal. Further, we present the money saved even after paying a penalty and once the refinance would be complete. This information is provided to help support the borrower in making the decision regarding refinancing. We go ahead with executing the refinance only if it is the smart step and will help our clients in creating a better financial future by helping them save more money in the long run.

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